HOGAN & MALLORY
[2016] FamCA 366
•19 May 2016
FAMILY COURT OF AUSTRALIA
| HOGAN & MALLORY | [2016] FamCA 366 |
| FAMILY LAW – PRACTICE & PROCEDURE – Procedural Fairness – Where the respondent wife disengaged from the proceedings and the trial proceeded on an undefended basis – Where the wife was afforded procedural fairness FAMILY LAW – PROPERTY SETTLEMENT – Where it is just and equitable to adjust the parties’ existing property interests – Where the applicant husband’s overall contributions outweighed those of the wife – Where the parties will retain their own superannuation interests of relatively equivalent value and their property interests are divided by apportionment of 75 per cent to the husband and 25 per cent to the wife |
| Family Law Act 1975 (Cth), ss 75, 79, 79A, 106A |
| Allesch v Maunz (2000) 203 CLR 172 Bevan & Bevan (2013) 49 Fam LR 387 Marriage of Coghlan (2005) 33 Fam LR 414 Stanford v Stanford (2012) 247 CLR 108 Taylor v Taylor (1979) 143 CLR 1 |
| APPLICANT: | Mr Hogan |
| RESPONDENT: | Ms Mallory |
| FILE NUMBER: | NCC | 844 | of | 2011 |
| DATE DELIVERED: | 19 May 2016 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Newcastle |
| JUDGMENT OF: | Austin J |
| HEARING DATE: | 5 May 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Levick |
| SOLICITOR FOR THE APPLICANT: | Braye Cragg Solicitors |
| COUNSEL FOR THE RESPONDENT: | Not Applicable |
| SOLICITOR FOR THE RESPONDENT: | Not Applicable |
Orders
The applicant shall pay to the respondent the sum of $136,782 within 60 days of the date of these orders.
Subject to compliance with Order 1 hereof, and in consideration of that payment, the applicant is declared the sole legal and beneficial owner (as between the parties) of the real property and improvements comprising Lot … in Deposited Plan .. Section …, being the property more commonly known as B Street, Suburb C, NSW (“the property”), and the respondent shall do all such things and sign all such documents as may be necessary to transfer all her right, title, and interest in the property to the applicant contemporaneously with her receipt of the payment pursuant to Order 1 hereof.
Subject to compliance with Order 2 hereof, and in consideration of that transfer, the applicant shall indemnify and keep indemnified the respondent against all rates, taxes, statutory charges, mortgage repayments, and other outgoings and liabilities affecting or relating to the property.
In default of compliance with Orders 1 and 2 hereof, the parties shall do all such acts and things and sign all such documents as may be necessary to forthwith list the property for sale by private treaty.
For the purposes of implementing Order 4 hereof:
(a)The listing agent shall be as agreed between the parties, and in default of agreement, with the agent chosen by ballot from the respective choices of the parties;
(b)The listing price for the property shall be as agreed between the parties, and in default of agreement, the price nominated by the listing agent;
(c)In the event of the property not being sold within 3 months from the date of its listing for sale, then it shall be put to sale by public auction on the following terms:
(i)The auctioneer shall be as agreed between the parties, and in default of agreement, the auctioneer chosen by ballot from the respective choices of the parties;
(ii)The auction shall take place within 6 weeks of the deadline date for sale by private treaty; and
(iii)The reserve price shall be as agreed between the parties, and in default of agreement, the reserve price nominated by the auctioneer.
(d)In the event the property is not sold by auction, or private negotiation within a further 7 days, then it shall be submitted to successive auctions within further 6 week periods until sold, otherwise upon the same terms and conditions as applied to the first auction.
Upon completion of the sale of the property pursuant to Orders 4 and 5 hereof, the proceeds of sale shall be applied as follows:
(a)Firstly, to pay all costs, commissions, and expenses of the sale, and to pay any Council and water rates and maintenance levies outstanding in respect of the property;
(b)Secondly, to discharge any encumbrance registered over or affecting the property; and
(c)Thirdly, from the balance then remaining, to pay to the applicant 70 per cent thereof and to pay to the respondent 30 per cent thereof.
The applicant is declared the sole legal and beneficial owner (as between the parties) of the parties’ shareholdings in D Pty Ltd and the respondent shall forthwith do all such things and sign all such documents as may be necessary to transfer all her right, title, and interest in shares in the corporation to the applicant.
The respondent shall forthwith do all such things and sign all such documents as may be necessary to resign any office she holds in D Pty Ltd.
The applicant is declared the sole legal and beneficial owner (as between the parties) of the parties’ units in the D Trust and the respondent shall forthwith do all such things and sign all such documents as may be necessary to transfer all her right, title, and interest in units in the Trust to the applicant.
The respondent is declared the sole legal and beneficial owner (as between the parties) of the parties’ shareholdings in E Pty Ltd and the applicant shall forthwith do all such things and sign all such documents as may be necessary to transfer all his right, title, and interest in shares in the corporation to the respondent.
The respondent shall forthwith do all such things and sign all such documents as may be necessary to cause E Pty Ltd to transfer to the applicant any shares that corporation may hold in F Pty Ltd.
Subject to compliance with Order 10 hereof, and in consideration of that transfer, the applicant shall indemnify and keep indemnified both E Pty Ltd and the respondent against:
(a)Any debt associated with the shares formerly held by E Pty Ltd in F Pty Ltd; and
(b)The judgment debt entered in proceedings numbered … conducted before the Supreme Court of NSW.
Unless otherwise provided:
(a)Each party shall be the sole legal and beneficial owner (as between the parties) of all other assets in their respective possession as at the date of these orders, and for that purpose bank accounts are deemed to be in the possession of the person named as the account holder, investment accounts are deemed in the possession of the named investor, and superannuation entitlements are deemed in the possession of the superannuant; and
(b)Each party shall be solely liable for, and shall indemnify the other against, any and all debts attaching or relating to the property in their respective possession and any debts in their respective sole names.
In the event of either party refusing or neglecting to sign within 7 days of a written request to do so any document necessary to implement the terms of these orders the Registrar of the Family Court of Australia at Newcastle is empowered to execute such documents on behalf of the parties pursuant to
s 106A of the Family Law Act.
Any and all other outstanding applications are dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hogan & Mallory has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT NEWCASTLE |
FILE NUMBER: NCC 844 of 2011
| Mr Hogan |
Applicant
And
| Ms Mallory |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons explain determination of the property settlement dispute between the parties pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”).
The proceedings have been tortuous and draining for the parties, so much so that the respondent apparently exhausted her endurance and disengaged from the proceedings. The final trial was therefore conducted in her absence.
As it transpired, it was just and equitable to alter the parties’ respective property interests, but not in the manner for which the applicant submitted.
History
The parties began their cohabitation in about March 2004, married in 2008, and finally separated in January 2011. They had no children.[1]
[1] Applicant’s affidavit, paras 4-6
At the time of separation, the respondent left the former matrimonial home in Newcastle and went to live in Perth. The applicant still lives in the former matrimonial home in Newcastle and the respondent still lives in Perth.
Property settlement proceedings were commenced relatively soon after the parties’ separation and were determined by orders made, with the parties’ consent, on 15 August 2012.[2]
[2] Applicant’s affidavit, para 109
Within the next couple of weeks, the applicant became aware of his liability for damages in unrelated litigation, of which he was ignorant at the time he offered his consent to the final property settlement orders.[3] Fearing the new liability would deprive the property settlement orders of the fairness the parties intended, the applicant filed an Initiating Application on 4 October 2012 seeking to set aside the orders made on 15 August 2012 pursuant to s 79A of the Act.
[3] Applicant’s affidavit, paras 110-118
With the respondent’s consent, the former orders were set aside[4] and the proceedings, which then entailed the parties’ respective competing applications for substitute substantive relief, were allowed to take their usual procedural course.
[4] Order 1 made on 7 November 2012
Regrettably, the parties’ subsequent compliance with procedural orders was lamentable and the proceedings meandered from one Court event to the next over several years. Many procedural disputes needed to be determined along the way and, without legal representation, the parties struggled. To give some indication of the languor, there were no less than 18 interlocutory hearings requiring many orders about subpoenas, interim injunctions, the appointment of single experts, financial disclosure, and costs.
Since the parties were not legally represented and because the respondent lived in Perth, in May 2014, leave was granted to the respondent to appear at all future Court events by telephone,[5] but her attendances thereafter were sporadic. She did not appear at Court events in November 2014,[6] September 2015,[7] and February 2016.[8] On the last of those occasions it was noted that if she had disengaged from the proceedings then it was the applicant’s intention to press ahead with the trial on an undefended basis.[9] A sealed copy of the orders made on that day, including a notation to that effect, was forwarded by the Court to the respondent at her last notified address. A confirmatory email to that effect was also sent by the applicant (through the solicitor he recently instructed) to the respondent at her last known email address.[10]
[5] Order 4 made on 9 May 2014
[6] Notation A made on 20 November 2014
[7] Notation A made on 25 September 2015
[8] Notation A made on 23 February 2016
[9] Notation C made on 23 February 2016
[10] Exhibits A and B tendered on 25 February 2016
The respondent did not appear at the next Court event on 25 February 2016.[11] As earlier foreshadowed, the applicant sought and was granted a hearing date, with the trial to be conducted on an undefended basis if the respondent took no steps to re-list the matter for further procedural orders in the meantime.[12] A sealed copy of the orders made on that day, including a notation to that effect, was forwarded by the Court to the respondent at her last notified address.
[11] Notation A made on 25 February 2016
[12] Order 1 and Notation B made on 25 February 2016
On the date fixed for trial (5 May 2016) there was again no appearance by or on behalf of the respondent. The trial therefore proceeded in her absence without regard to the documents previously filed by her in the proceedings.
It is a fundamental principle of natural justice that parties should be afforded reasonable opportunity to appear before the Court and present their case, however, being afforded the opportunity and making use of it are two quite different things. If a party squanders the given opportunity by voluntarily choosing not to appear at Court to prosecute and/or defend the proceedings, without good reason and in full knowledge the trial may proceed regardless, as was the case with the respondent here, there is no miscarriage of justice by the trial proceeding in the absence of that party. The Court is not required to indefinitely delay the proceedings merely because a party declines to appear (see Allesch v Maunz (2000) 203 CLR 172 at 182-186, 189-191; Taylor v Taylor (1979) 143 CLR 1 at 4). On the available evidence, the respondent was not deprived of procedural fairness.
The evidence
The applicant relied upon the following evidence:
(a)His affidavit, filed on 26 April 2016.
The document actually annexed to the affidavit as “Annexure J” was annexed in error, so the applicant tendered in evidence the correct document, together with the email he sent to the respondent explaining the error.[13]
[13] Exhibit A2
(b)His financial statement, filed on 4 May 2016.
(c)The affidavit of Mr G, filed on 8 April 2016.
Mr G was jointly appointed by the parties as a single expert in
June 2013.[14] Although his most recent affidavit was procured solely by the applicant and at his own expense, it was received in evidence because of the single expert’s former joint appointment. He was not an adversarial expert witness.
(d)The affidavit of Ms H, filed on 22 February 2012.
Ms H was also jointly appointed by the parties as a single expert, but that was in November 2011 and her affidavit was filed before the initial proceedings were concluded by the consent orders made in August 2012. Her evidence was of no value in these proceedings.
(e)The Balance Sheet e-filed by the respondent on 20 November 2015.
The applicant relied on admissions made by the respondent within it.
(f)A letter sent by the Commonwealth Bank to the respondent.[15]
(g)Correspondence between the applicant and F Pty Ltd.[16]
[14] Order 3(a)(i) and Notation D made on 4 June 2013
[15] Exhibit A3
[16] Exhibit A4
There was no challenge to either the admissibility or reliability of the evidence adduced by the applicant, but that does not mean it is accepted uncritically. Some parts of his affidavit were prepared with scant regard for the provisions of the Evidence Act 1995 (Cth) so, even absent any challenge, not all of his evidence is accorded the same weight.
The respondent did not attend Court to prosecute her own application contained within the Response she filed on 23 November 2012, so it is dismissed.
The numerous affidavits filed by the respondent in the proceedings are ignored because she was not available to be tested in cross-examination about the reliability of such evidence.
Legal principles
Orders under s 79 of the Act altering the property interests of parties may only be made if the Court is first satisfied, pursuant to s 79(2), it is just and equitable to make such orders. The Act then identifies in s 79(4) the matters the Court must take into account in considering what order, if any, should be made (see Stanford v Stanford (2012) 247 CLR 108 at [22], [35]). While those two inquiries are not to be conflated (see Stanford at [35], [40], [51]), it is permissible for the s 79(4) factors to inform the inquiry under s 79(2) (see Bevan & Bevan (2013) 49 Fam LR 387 at [83]-[89], [163], [169], [171]-[172]).
It is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying the existing legal and equitable property interests of the parties. It must not be assumed that the parties’ rights to or interests in marital property should be different from those that then exist or that a party has the right to have the parties’ property divided by reference to considerations set out in s 79(4) of the Act (see Stanford at [37]-[40], [50]). Commonly, however, it will be just and equitable for the parties’ property rights to be altered because the breakdown in their relationship will end their fiscal unity and deprive them of common use of their property (see Stanford at [42]; Bevan at [68]-[70], [82], [164]-[165]).
If and once determined it is just and equitable for the property interests of the parties to be altered, the process of evaluating the proper orders to make is dictated by the factors enumerated within s 79(4) of the Act. The Court must necessarily identify and assess the parties’ contributions within the meaning of ss 79(4)(a)-(c) and then take account of the relevant matters referred to in
ss 79(4)(d)-(g) and 75(2) of the Act.
Existing property interests
The applicant endorsed the submissions in his Case Outline Document, which document contained a Balance Sheet asserting the existence and value of the parties’ respective proprietary interests. The following findings do not coincide with the contents of the applicant’s Balance Sheet, but the assets and liabilities are numbered identically.
The applicant’s assets and liabilities are as follows:
No.
Assets
Value
Total
2
Shares in D P/L atf D Trust (50 per cent)
82,467
3
Country I land (50 per cent)
nil
4
Shares in E P/L (50 per cent)
nil
5
Shares in J P/L
nil
6
4WD vehicle
58,000
7
SUV vehicle
32,000
8
Units in L P/L
nil
10
Motor scooter
3,000
13
Shares in F P/L
(deleted)
14
Household contents
10,000
17
Box trailer
275
Sub-total
185,742
185,742
Liabilities
19
Mortgaged loan (50 per cent)
110,720
20
(deleted)
21
CBA motor vehicle leases
91,506
23
Loan re shares in F P/L
(deleted)
24
Debt for professional indemnity claim against E P/L
22,286
Sub-total
224,512
-224,512
Net deficit
-38,770
The respondent’s assets and liabilities are as follows:
No.
Assets
Value
Total
1
Former matrimonial home
680,000
2
Shares in D P/L atf D Trust (50 per cent)
82,467
3
Country I land (50 per cent)
nil
4
Shares in E P/L (50 per cent)
nil
9
Units in L P/L
nil
11
Horse
nil
12
Jewellery
1,650
15
Household contents
1,200
16
Sedan vehicle
16,000
18
COMPANY O shares
3,100
Sub-total
784,417
784,417
Liabilities
19
Mortgaged loan (50 per cent)
110,720
20
(deleted)
22
Sedan lease
nil
Sub-total
110,720
-110,720
Net surplus
673,697
The above findings are made for the following reasons.
Items 1 & 19
The respondent is the sole legal proprietor of the former matrimonial home in Newcastle, though the parties were joint borrowers and mortgagees in respect of its purchase.[17] For that reason, liability for one-half of the mortgaged debt is attributed to each party.
[17] Applicant’s affidavit, paras 120, 122
The value of the property ($680,000) is established by the evidence of
Mr G. The pay-out value of the mortgage ($221,440) is established by the applicant’s admission in his financial statement,[18] which is generally consistent with the recent admission made by the respondent.[19]
[18] Applicant’s financial statement, para 46
[19] Balance Sheet 20/11/15, item 21
Items 2 & 20
Before the parties began their relationship, the applicant set up a trust named D Trust (“DT”) and incorporated D Pty Ltd (“D”) as the corporate trustee. He installed his parents as the shareholders of D and himself as the sole beneficiary of DT.[20]
[20] Applicant’s affidavit, paras 10, 20, 70
In June 2009, the applicant’s parents transferred their shareholdings in D to the parties in equal shares and, contemporaneously, the parties were assigned equal units in DT.[21] The parties both remain directors of, and shareholders in, D.[22]
[21] Applicant’s affidavit, para 71
[22] Applicant’s affidavit, paras 78, 133(g)
The investment portfolio held by D on behalf of DT is currently valued at $334,626,[23] but the investment portfolio is the subject of a margin loan,[24] with a current payout value of $169,691.[25] The current net value of the investment is therefore $164,935, of which one-half is $82,467. That represents the value of each party’s individual interest in D and DT.
[23] Exhibit A2
[24] Applicant’s affidavit, paras 79, 84, 86
[25] Exhibit A2
The applicant’s submissions about his proprietary interest in D and DT were erroneous on two bases.
First, the respondent has an equal proprietary interest in both D and DT. The interest is not his alone. I pay no heed to the applicant’s evidence that:[26]
A clear understanding that the assets of [D]…would remain the property of [the applicant] was discussed and implied throughout the entire relationship.
That may have been his belief, but it carries no probative weight in the face of his own evidence about the joint legal and beneficial ownership enjoyed by the parties in D and DT.
[26] Applicant’s affidavit, para 87
Secondly, the margin loan debt is the exclusive corporate liability of D because it is the legal proprietor of the investment portfolio. The parties have no personal liability for the loan, in the absence of them having guaranteed D’s repayment of the loan, and no evidence to that effect was adduced.
Item 3
The parties purported to jointly buy land in Country I. The uncontested evidence of the applicant was that, by reason of Country I law and the intransigent deceit of their Country I agent, they are unable to prove their legal or beneficial ownership of the land.[27] Such evidence is generally consistent with the inability of the parties to procure valuation evidence about the land, despite various past orders appointing a single expert witness for that purpose.
[27] Applicant’s affidavit, paras 129-132
Proprietorship could not be proven and the land is accorded nil value for the purpose of these proceedings.
Item 4
The parties incorporated E Pty Ltd (initially under a former name) (“E”) as the vehicle to conduct a business they jointly established. E was the corporate trustee of the M Trust and the parties were joint directors of, and shareholders in, E.[28] The parties are still equal shareholders in E,[29] despite the applicant resigning his directorship in July 2012.[30]
[28] Applicant’s affidavit, paras 29, 74
[29] Applicant’s affidavit, paras 92, 133(c), 133(d)
[30] Notation A made on 11 December 2012; Applicant’s affidavit, paras 81(a), 105
In June 2013, the parties agreed their shareholdings in E were worthless.[31]
[31] Notation A made on 4 June 2013
Item 5
After the parties’ separation, the applicant and his parents incorporated B Pty Ltd (“B”) to be the corporate receptacle of the applicant’s income. The three of them have equal shareholdings in B.[32]
[32] Applicant’s affidavit, para 98
In November 2013, a former order appointing a single expert to value the applicant’s shareholding in B was discharged because the applicant asserted the shareholding was worthless and, as a demonstration of his bona fides, was prepared to transfer the shareholding to the respondent.[33]
[33] Order 7 and Notation B made on 18 November 2013
I accept the applicant’s shareholding in B is worthless.
Items 6, 7, 10, 17 & 21
The applicant’s motor vehicles and trailer have not been expertly valued. Their values are respectively established by the admissions made by the applicant in his financial statement.[34]
[34] Applicant’s financial statement, paras 40, 43
The two cars currently owned by the applicant (items 6 and 7) were acquired by him on lease from the Commonwealth Bank.[35] The current pay-out value on the leases, for which the applicant is liable, is $91,506 (item 21).[36]
[35] Applicant’s affidavit, paras 181-183
[36] Applicant’s financial statement, para 52
Items 8 & 9
The parties purchased units in the L Pty Ltd scheme some years ago, but the scheme failed and is presently in administration. Unit holders have no expectation of any return on their investments.[37]
[37] Applicant’s affidavit, paras 134-138
That evidence is consistent with the parties’ agreement in June 2013 that their investments are worthless.[38]
[38] Notation C made on 4 June 2013
Item 11
The respondent had a horse at the time of the parties’ separation,[39] but that was over five years ago. The applicant could not now know whether the respondent still owns it and, even if she does, he could not establish its value. No value is attributed to it.
[39] Applicant’s affidavit, paras 63, 64, 133(n)
Item 12
At separation, the respondent retained some jewellery.[40] The parties procured single expert evidence about the value of that jewellery in 2012,[41] but that was more than four years ago. It is unknown what jewellery the respondent now owns and, in any event, the applicant was bereft of reliable evidence as to its current value. The respondent recently admitted her ownership of jewellery worth $1,650,[42] so that value is adopted as an admission against interest.
[40] Applicant’s affidavit, paras 133(o), 133(p)
[41] Affidavit of Ms H filed 22/2/12
[42] Balance Sheet 20/11/15, item 10
Items 13 & 23
The applicant did, and still does, contract his services to F Pty Ltd (“F”), which arrangement enabled his acquisition of shares in F on credit.[43]
[43] Applicant’s affidavit, para 133(e)
Documents emanating from F suggest the applicant owns 17,299 shares worth $131,319, but in respect of which he owes $158,404.[44] The applicant deposed that 3,844 shares were owned by E,[45] but the evidence is unclear as to whether those shares comprise part of, or are additional to, the applicant’s own parcel of shares in F.
[44] Exhibit A4
[45] Applicant’s affidavit, para 133(e)
There is general equivalence between the values of the share parcel/s and the debt owed in respect of the shares so, in the absence of sufficient clarity about the extent of the shareholding and ownership of it, the values of the shares and the debt associated with them are deemed to off-set. The applicant did not disagree with that approach when that prospect was debated in submissions.
Items 14 & 15
The value of the applicant’s household contents is drawn from his admission in his financial statement.[46]
[46] Applicant’s financial statement, para 42
The value of the respondent’s household contents is drawn from her admission in the Balance Sheet she filed several months ago.[47]
[47] Balance Sheet 20/11/15, item 12
Items 16 & 22
The respondent bought a European vehicle on hire purchase finance. The respondent recently admitted the car was worth $16,000,[48] which is the value attributed to it. Correspondence between the respondent and the financier implied the hire purchase agreement would be paid out by January 2016,[49] so the current debt in respect of the car is assumed to be nil.
[48] Balance Sheet 20/11/15, item 4
[49] Exhibit A3
Item 18
The respondent owned COMPANY O shares at the time of separation.[50] The respondent recently admitted current ownership of the shares and their value of $3,100.[51]
[50] Applicant’s affidavit, para 133(s)
[51] Balance Sheet 20/11/15, item 11
Item 24
When E still operated its business it carried professional indemnity insurance. In 2011, both E and the applicant were sued as first and second defendants respectively in a professional negligence suit. The litigation was settled for a judgment debt, though the evidence is unclear about how liability was apportioned between E, its insurer, and the applicant.
The applicant deposed he guaranteed payment of an insurance excess on behalf of E and so his personal liability amounted to $80,000.[52] Of that amount, he has so far paid about $57,000, leaving him indebted for $22,286.[53]
[52] Applicant’s affidavit, paras 110-119
[53] Applicant’s affidavit, para 178; Applicant’s financial statement, para 54
Superannuation
The applicant admitted his superannuation interest amounted to $263,811,[54] and the respondent recently admitted her superannuation interest amounted to $217,000.[55]
[54] Applicant’s financial statement, para 45; Applicant’s affidavit, para 187
[55] Balance Sheet 20/11/15, item 29
The Court is ordinarily exhorted to consider the parties’ superannuation interests separately from their property interests (see Marriage of Coghlan (2005) 33 Fam LR 414 at 428-429). The applicant agreed that approach should apply in this instance. He contended the parties’ superannuation interests should not be treated as property interests, but rather considered separately under s 75(2) of the Act, in circumstances where there was no evidence about the parties’ respective contributions to the two superannuation interests and no live application for superannuation splitting orders. That submission is accepted.
Section 79(2)
There are several reasons why it is just and equitable to adjust the parties’ existing property interests.
First, the parties cohabited for approximately seven years and the vastly disparate value of their respective property interests is not adequately explained by any post-separation event.
Secondly, the respondent conceded adjustment of their property interests was warranted. She agreed to the original property settlement orders made in August 2012 and, after those orders were set aside, she filed a Response setting out the replacement property settlement orders she proposed be made.
Thirdly, although the respondent remains the sole legal proprietor of the former matrimonial home in Newcastle, the applicant has lived in and maintained it since the parties’ separation over five years ago. The parties remain jointly indebted for the loan which is secured by mortgage over the property, so disentanglement of their joint and several liability is fundamental to the severance of their financial relationship. The home is the single most valuable item of property owned by either party.
Sections 79(4) & 75(2)
Initial contributions
At the commencement of the parties’ cohabitation in early 2004 the applicant brought to the relationship:[56]
(a)A share portfolio with a net value of about $245,000, though at the time of cohabitation the applicant had already transferred the ownership of the share portfolio to D as trustee for the DT, of which he was the sole beneficiary;[57]
(b)Savings of about $10,000;
(c)A motor cycle worth about $9,500;
(d)An encumbered car with a net value of about $11,000;
(e)Superannuation then worth about $70,000; and
(f)A quantity of household contents.
[56] Applicant’s affidavit, paras 14-16
[57] Applicant’s affidavit, para 20
At the commencement of the parties’ cohabitation the respondent brought to the relationship:[58]
(a)A car worth about $7,000;
(b)Shares worth about $16,000;
(c)Superannuation, the value of which was unknown to the applicant; and
(d)A quantity of household contents.
[58] Applicant’s affidavit, paras 17-18
The applicant does not know whether the respondent then had any liabilities,[59] but in the absence of proof of any it is assumed not.
[59] Applicant’s affidavit, para 19
By comparison, the applicant contributed assets and superannuation with a net value of about $350,000 and the respondent introduced assets and superannuation of not less than $23,000.
Contributions during cohabitation
The applicant worked in a professional capacity throughout the relationship. The respondent was employed for most, but not all, of the parties’ relationship.
At the commencement of their relationship the applicant’s income was about $120,000 per annum and the respondent’s income was about $40,000 per annum.[60]
[60] Applicant’s affidavit, para 22
Very shortly after the parties commenced cohabitation, they jointly established a business which they conducted through E. They each played important roles in the conduct of that business. The applicant sought to attract custom to the business and the respondent provided administrative support.[61] Simultaneously, both parties were independently employed by Company N.[62]
[61] Applicant’s affidavit, para 29
[62] Applicant’s affidavit, paras 29-33
In November 2004, the respondent contracted to purchase the former matrimonial home in her sole name, which the applicant deposed was for “asset protection reasons”.[63] Although the home was purchased by the respondent, the purchase was a joint commitment. The purchase was funded by use of the respondent’s savings,[64] the sale proceeds of some shares sold by her,[65] money advanced by D,[66] and a joint loan taken out by the parties, which was secured by mortgage over the property.[67] The parties thereafter spent money from their incomes renovating the property.[68]
[63] Applicant’s affidavit, para 120
[64] Applicant’s affidavit, paras 24, 31
[65] Applicant’s affidavit, paras 31, 121
[66] Applicant’s affidavit, paras 81(c), 81(d), 81(e), 81(j), 81(m), 88
[67] Applicant’s affidavit, para 122
[68] Applicant’s affidavit, para 125
Up until 2008, the applicant earned considerably more income than the respondent.[69] In 2008 the respondent began employment as a manager with Company O[70] and in 2009 the applicant began employment with Company P.[71] From that time their incomes were equivalent.[72]
[69] Applicant’s affidavit, paras 44-45
[70] Applicant’s affidavit, para 42
[71] Applicant’s affidavit, para 41
[72] Applicant’s affidavit, para 50
In 2010, the respondent’s employment with Company O ceased and she was not gainfully employed for the remainder of the parties’ relationship.[73]
[73] Applicant’s affidavit, paras 42, 45
The applicant implied that he made greater contributions than the respondent to the performance of household chores and maintenance during the parties’ relationship,[74] but that is a notorious boast of many former domestic partners. In circumstances where the parties had no children and both were gainfully employed, they probably contributed fairly equally in that regard. For the short period of the respondent’s unemployment, she probably did most housework.
[74] Applicant’s affidavit, paras 42, 67-68
The parties separated in January 2011 and the applicant alleged that, over preceding months, the respondent made preparations for her departure from the relationship. From late 2009, the respondent withdrew large unexplained amounts from the parties’ accounts,[75] in February 2010 she began diverting her income into a different account,[76] from May 2010 she reduced her contribution to operation of the E business,[77] later in 2010 she had her tax refund directed to an address in Perth,[78] and from September 2010 she made increased cash withdrawals from the parties’ joint account.[79]
[75] Applicant’s affidavit, paras 142-147
[76] Applicant’s affidavit, paras 48, 148
[77] Applicant’s affidavit, para 56
[78] Applicant’s affidavit, paras 50-51, 172
[79] Applicant’s affidavit, paras 54-55
Post-separation contributions
The applicant remained in sole occupation of the former matrimonial home after the parties’ separation.[80] He has since been exclusively responsible for maintaining the property and meeting the mortgage repayments and rates.[81]
[80] Applicant’s affidavit, para 124
[81] Applicant’s affidavit, paras 173-175
The balance of the mortgaged loan was artificially enlarged to repay the debt associated with the respondent’s failed investment in L Pty Ltd. The applicant paid the debt associated with his similar investment, but the respondent paid out her investment debt by extending the mortgage, which means the applicant carried her debt of about $55,000.[82]
[82] Applicant’s affidavit, paras 134-139, 175
From separation until June 2012, the applicant was exclusively responsible for conducting the business of E, for which he did not receive proper recompense.[83]
[83] Applicant’s affidavit, paras 176-177
The professional negligence suit brought against E and the applicant in 2011 was settled by the entry of a judgment debt in 2012. The liability amounted to $80,000, but since E is effectively insolvent, the applicant has borne liability for it under a guarantee. So far he has repaid nearly $60,000.[84] That debt arose from a business carried on for the joint benefit of both parties.
[84] Applicant’s affidavit, paras 111-119
The D investment portfolio was frozen on the instructions of the respondent in her capacity as director of D. The returns on the investment portfolio continued to fund the interest accrued on the margin loan.[85] The applicant submitted that the respondent’s conduct prevented him from managing the investment more prudently, but that is not a strong feature of the evidence.
[85] Applicant’s affidavit, paras 78-80
The future
The applicant is aged 42 years and the respondent is aged 37 years.[86] Both are presumed to be in good physical and psychological health. No evidence was adduced to the contrary.
[86] Applicant’s affidavit, paras 2-3
The applicant is self-employed,[87] but the evidence was discrepant about his current income. He deposed to current annual income of both $150,000[88] and over $200,000.[89] He has re-partnered, but his partner’s financial circumstances do not materially improve his financial position.[90]
[87] Applicant’s affidavit, para 2
[88] Applicant’s affidavit, para 194
[89] Applicant’s financial statement, para 9
[90] Applicant’s affidavit, paras 188-193
The respondent is employed by Company O as a manager in Perth.[91] Presumably her annual income approximates $140,000, which is inferred from the quantum of her income just before separation[92] and just after separation.[93] She has desirable experience and skills in her field of employment.[94]
[91] Applicant’s affidavit, para 3
[92] Applicant’s affidavit, para 50(b)
[93] Applicant’s affidavit, para 161
[94] Applicant’s affidavit, para 168
The applicant deposed that the respondent has access, either formally or informally, to assets of substantial value within the control of her family.[95] He complained about the failure of third parties to answer subpoenas he issued to them,[96] which might have uncovered evidence to prove his belief, but he did nothing to enforce the subpoenas. He made a written request of the respondent to disclose her interest in the deceased estate of her late mother, but the respondent did not reply.[97] The only reliable evidence as to the quantum of the respondent’s financial resources was the admission she made in the Balance Sheet she filed in November 2015, to the effect that her interest in the deceased estate of her late mother was valued at $400,000.[98]
[95] Applicant’s affidavit, paras 140-141, 151-154, 170
[96] Applicant’s affidavit, para 151
[97] Applicant’s affidavit, para 171
[98] Balance Sheet 20/11/15, item 34
Conclusions & Orders
The applicant submitted for his overall entitlement to 85 per cent of the aggregated property interests of the parties.
His submission is rejected because it exaggerates the extent of his contributions and future needs. Nonetheless, his contributions outweighed those of the respondent for three principal reasons. First, his initial financial contribution at the commencement of cohabitation over 10 years ago was much larger than the respondent’s and still represents about one-half of the total net value of the parties’ current property interests. Secondly, although the parties probably worked as hard as each other, the applicant’s income outstripped the respondent’s income for the majority of their relationship. Thirdly, the applicant’s post-separation contributions were significantly superior to those of the respondent.
Both parties have and will retain superannuation interests of relatively equivalent value. The respondent also seemingly has other financial resources available to her through her family and her late mother’s deceased estate, but all that can really be said on the evidence is that she is likely to receive cash of not less than $400,000 at some point in the near future. Both parties have handsome income-earning potential.
Pursuant to ss 79(4) and 75(2) of the Act, the applicant’s overall entitlement to the parties’ property interests is assessed at 75 per cent. Their combined net assets are worth $634,927 (= 673,697 – 38,770), so 75 per cent thereof is $476,195.
If (as he wants) the applicant retains the former matrimonial home (subject to its mortgage), the whole of the shareholding in D, his shares in B, his motor vehicles (subject to their encumbrances), and the other items of personalty in his possession, he will have assets with a net value of $612,977.
That would mean the respondent will retain the whole of the shareholding in E and the items of personalty in her possession, which have a net value of $21,950. The respondent should take the whole of the shareholding in E because, shortly after separation, she instructed the bank to freeze the banking accounts of E, which is why the applicant then incorporated B with his parents.[99] The business incomes of E and B were reconciled by the applicant in accordance with interim orders made between the parties in June 2011.[100] The applicant then resigned his position with E and the respondent has since had sole control of E.[101]
[99] Applicant’s affidavit, paras 95-98
[100] Applicant’s affidavit, paras 99-100
[101] Applicant’s affidavit, paras 101-106
Although the respondent will take the whole of the shareholding in E, the respondent must, in her capacity as sole director of E, cause it to transfer to the applicant any shares it holds in F. The applicant alleged E still holds some F shares which are properly his because the shares exist as a consequence of his personal business relationship with F.[102]
[102] Applicant’s affidavit, para 107
The applicant will be obliged to pay to the respondent cash of $136,782 to adjust their entitlements.
The applicant will then be left with assets worth $476,195 (which is 75 per cent of net assets) and the respondent will be left with assets worth $158,732 (which is 25 per cent of net assets).
The orders make provision for such a division of their property but, in the event that the applicant does not pay $136,782 to the respondent, alternate provision is made for sale of the former matrimonial home and correlative division of the sale proceeds between them. Having regard to the established value of the property ($680,000) and its encumbrance ($221,440), its net value is $458,560. If the respondent is to receive a payment of $136,782 (which is close to 30 per cent of the property’s net value) then the applicant should receive $321,778 (which is close to 70 per cent of the net value). The orders provide for them to receive those percentages from the net sale proceeds if the property is sold, because neither party will then be disadvantaged if the property sells for more or less than the value opined by the single expert.
I certify that the preceding ninety one (91) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 19 May 2016.
Associate:
Date: 19 May 2016
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Procedural Fairness
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Remedies
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Jurisdiction
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