Holland and Holland
[2016] FCCA 1547
•24 June 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HOLLAND & HOLLAND | [2016] FCCA 1547 |
| Catchwords: FAMILY LAW – Consent for Wife to institute proceedings under s.79 of the Family Law Act 1975 (Cth) out of time – leave granted pursuant to s.44(3) of the Act – where Husband receives inheritance 3 years after separation – whether inheritance should be included in property pool – inheritance treated as financial resource under s.75(2) – only asset in property pool is former matrimonial home – modest pool – final orders made. |
| Legislation: Family Law Act 1975, ss.4, 44, 75, 79, 106A |
| Cases cited: Bonnici & Bonnici (1992) FLC 92 – 272 Burke & Burke (1993) FLC 92 – 356 Jarrott & Jarrott (No 2) [2012] FamCAFC 72 Singerson and Joans [2014] FamCAFC 238 Stanford v Stanford [2012] HCA 52; 47 Fam LR 481; (2012) FLC 93-518 Wall & Wall (2002) FLC 93 – 110 |
| Applicant: | MS HOLLAND |
| Respondent: | MR HOLLAND |
| File Number: | DGC 3242 of 2011 |
| Judgment of: | Judge Jones |
| Hearing dates: | 23 and 24 November 2015 |
| Date of Last Submission: | 27 April 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 24 June 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Potter |
| Solicitors for the Applicant: | Bramich Legal |
| Counsel for the Respondent: | Ms Teicher |
| Solicitors for the Respondent: | Knox Family Law Specialists Pty Ltd |
ORDERS
The Applicant Wife is granted leave pursuant to s.44(3) of the Family Law Act 1975 (Cth) (“the Act”) to institute proceedings under s.79 of the Act.
That within 90 days of these Orders the Wife pay the Husband $90,000.00.
That upon the Wife complying with Order (2), the Wife refinance the real property situated at Property L in the State of Victoria (“the Property L property”) into her own name and the Husband do all acts and things and sign such documents to facilitate such refinancing and to transfer the title of the Property L property to the Wife at the sole expense of the Wife.
In the event that the Husband defaults in executing any document necessary for the refinancing of the Property L property by the Wife or transfer of title of the Property L property to the Wife pursuant to s.106A of the Act, a Registrar or Deputy Registrar of the Federal Circuit Court at Melbourne is hereby appointed to execute all deeds and documents in the name of the party in default and do all things and acts necessary to give validity and operation to these Orders; and
(a)the Husband is ordered to pay all reasonable costs incurred by the other party for the purpose of enforcing this Order and providing her damages; and
(b)for the purpose of this Order, an affidavit setting out the Husband’s failure to comply with the Orders shall be sufficient evidence of neglect and default.
In the event the Wife fails to comply with Order (2) and/or Order (3) so far as refinancing of the Property L property is concerned, the Property L property forthwith be placed on the market for private sale with a reserve to be agreed between the parties and with an agent to be agreed between the parties.
In the event the parties cannot agree on an agent or a reserve price they shall:
(a)in the event of a dispute about an agent, jointly seek that the President of the Real Estate Institute of Victoria (“REIV”) nominate an agent; and
(b)in the event of a dispute about a reserve price, have the agent appointed by the parties or pursuant to paragraph (6)(a) set the reserve.
Pending the transfer of title or sale of the Property L property the Wife shall have sole use and occupation of the former matrimonial home and shall pay all outstanding interest payments on the (omitted) Bank Home Equity Line of Credit together with all rates and taxes as they fall due and shall otherwise be responsible for any amounts outstanding as at the day of making the Orders.
Upon the completion of the proceeds of sale, the proceeds be applied:
(a)first, to pay the costs, commission and other expenses of the sale;
(b)second, to discharge the mortgage and any other encumbrance affecting the real property;
(c)third, to pay the Wife 62%; and
(d)fourth, to pay the Husband 38%.
Otherwise, both parties retain all property in their possession as of this date including superannuation interests.
IT IS NOTED that publication of this judgment under the pseudonym Holland & Holland is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
DGC 3242 of 2011
| MS HOLLAND |
Applicant
And
| MR HOLLAND |
Respondent
REASONS FOR JUDGMENT
Introduction and Background
This decision is in relation to an application by Ms Holland (“the Wife”) for an Order that she be permitted to proceed out of time with an application under s.79 of the Family Law Act 1975 (“the Act”), to alter the property interests as between herself and Mr Holland (“the Husband”) and Orders seeking the alteration of the property interests of the parties.
The Husband does not oppose the Wife proceeding out of time but the parties are in dispute over what can only be said to be modest property interests. The most significant dispute (because it substantially affects the size of the parties’ property pool) is whether an inheritance received by the Husband sometime after separation should be included in the property pool.
The following background is taken to be findings of fact unless otherwise stated:
a)the Husband was born on (omitted) 1966 and the Wife was born on (omitted) 1970;
b)they commenced cohabitation in 1990, were married on (omitted) 1995, separated in July 2007 and by decree nisi were divorced on 8 January 2012;
c)there are two children of the relationship, X (“X”) born on (omitted) 1998 and Y (“Y”) born on (omitted) 2001;
d)on (omitted) 2000, the parties purchased the former matrimonial home at Property L, Victoria (“former matrimonial home”) for $160,000.00. The paternal grandparents advanced the parties $31,000.00, which was repaid by the parties within three years;
e)at separation, the mortgage on the former matrimonial home was $132,332.09. On 1 November 2015, the mortgage encumbering the former matrimonial home was $138,383.17;
f)the Husband, who is a (occupation omitted), commenced his own (omitted) business in or around 1992 and in 1997 the business was restructured as a partnership with the Husband and Wife as joint partners. The name of the business was (omitted business). A joint bank account was operated for that business. The Respondent undertook the (omitted) work associated with the business whilst the Wife engaged in administration/book work for the business. The parties dispute the contribution of the Wife to the business. In September 2007, the Husband re-established his business as a sole trader under the name “(business omitted)”;
g)the Wife was the primary carer for X and Y during the relationship;
h)upon separation in July 2007, the Husband left the former matrimonial home and lived with his brother. The Wife remained in the former matrimonial home with the children until in or around 2009;
i)the Husband paid the mortgage repayments for the former matrimonial home until in or around April 2009 when he says he formed the belief that the Wife had re-partnered and the new partner was spending a significant amount of time in the former matrimonial home. Since that time, the Wife has been responsible for the mortgage repayments for the former matrimonial home;
j)after leaving the former matrimonial home, the Wife embarked on renovations to the house to enable it to be tenanted. The rental income which commenced in July 2009, was deposited in the parties’ (omitted) Bank Home Equity Line of Credit from which the Wife paid the mortgage and other expenses;
k)after leaving the former matrimonial home in 2009, the Wife commenced living in (omitted), Victoria, with X and Y. X returned to Melbourne to live with the Husband in 2010. The Wife commenced living in March 2015, in rental accommodation at (omitted), Victoria. Presently, X resides with the Wife three weeks during each month and spends one week with the Husband (subject to one exception when X spent three weeks with the Husband) and Y spends two weeks with the Wife and two weeks with the Husband each month;
l)the Wife is employed in (omitted) as an (occupation omitted) on a casual basis and has obtained various Certificates to enable her to obtain full-time employment as an (occupation omitted);
m)in February 2011, pursuant to the Husband’s brother’s Last Will and Testament, the Husband inherited a property situate at Property W, Victoria (“the Property W property”). At the time he inherited the property, there was a mortgage of $83,000.00 encumbering it. The Husband’s parents, who received the Husband’s brother’s superannuation benefits under the Will, paid out the mortgage. Consequently, the Husband is sole proprietor of this unencumbered property.
Evidence
The Wife relied on the following affidavits and documents:
a)initiating application filed on 15 April 2014;
b)her affidavit filed on 15 April 2014;
c)her financial statement filed on 15 April 2014;
d)her affidavit filed on 9 November 2015;
e)updated financial statement filed on 9 November 2015;
f)her outline of case filed on 20 November 2015;
g)written submissions of the Wife filed on 23 March 2016; and
h)written submissions in reply of the Wife filed on 27 April 2016.
The Wife tendered the following Exhibits:
a)Exhibit W1 – correspondence signed by Mr G dated 21 February 2012;
b)Exhibit W2 – Invoices to the Husband’s former business ‘(omitted business)’ for the taxation year 2007/2008;
c)Exhibit W3 – Spreadsheet of credit card expenses prepared by the Wife and receipts upon which the spreadsheet is based; and
d)Exhibit W4 – Mobile phone accounts in the Wife’s name for the period from 2007 to 2009;
The Wife was cross-examined.
The Husband relied on the following affidavits and documents:
a)response filed on 11 September 2014;
b)his affidavit filed on 11 September 2014;
c)his financial statement filed on 11 September 2014;
d)his affidavit filed on 13 November 2015;
e)his outline of case filed on 20 November 2015; and
f)written submissions of the Husband filed on 24 April 2016.
The Husband tendered the following Exhibits:
a)Exhibit H1 – (omitted) Bank Home Equity Line of Credit – Statements in the names of both parties for the period from June 2006 to October 2015;
b)Exhibit H2 – VicRoads application for transfer of vehicle registration dated 22 February 2012;
c)Exhibit H3 – (omitted) Bank statements for the joint credit card in the names of both parties, account ending (omitted) for the period from July 2007 until present;
d)Exhibit H4 – Invoice from (omitted) dated 24 January 2014;
e)Exhibit H5 – (omitted) Bank Visa Card Statements in the names of both parties for the period from July 2007 to December 2008;
f)Exhibit H6 – (omitted) Bank Business Account Statements in the names of both parties for the period from January 2007 to May 2009; and
g)Exhibit H7 – Invoice from (omitted) Veterinary Centre dated 29 June 2011.
The Husband was cross-examined.
Extension in Time
Section 44 of the Act provides that:
“(3) Where, whether before or after the commencement of section 21 of the Family Law Amendment Act 1983:
(a) a divorce order has taken effect; or
(b) a decree of nullity of marriage has been made;
proceedings of a kind referred to in paragraph (c), (caa), (ca) or (cb) of the definition of matrimonial cause in subsection 4(1) (not being proceedings under section 78 or 79A or proceedings seeking the discharge, suspension, revival or variation of an order previously made in proceedings with respect to the maintenance of a party) shall not be instituted, except by leave of the court in which the proceedings are to be instituted or with the consent of both of the parties to the marriage, after the expiration of 12 months after:
(c) in a case referred to in paragraph (a)--the date on which the divorce order took effect; or
(d) in a case referred to in paragraph (b)--the date of the making of the decree.
The court may grant such leave at any time, even if the proceedings have already been instituted.
(3AA) However, if such proceedings are instituted with the consent of both of the parties to the marriage, the court may dismiss the proceedings if it is satisfied that, because the consent was obtained by fraud, duress or unconscionable conduct, allowing the proceedings to continue would amount to a miscarriage of justice.”
The Husband consents to the institution of property proceedings by the Wife. He is legally represented and has been represented by counsel at the hearing. I am satisfied that his consent has not been obtained by fraud, duress or unconscionable conduct.
Accordingly, I grant leave to the Wife to institute property proceedings.
Alteration of Property - The Law
Part VIII of the Act is the part of the Act dealing with property, spousal maintenance and maintenance agreement. The major provisions relating to marital property division are contained in sub-ss.79(1); 79(2); 79(4); and 75(2) of the Act.
Pursuant to sub-s.79(1) of the Act, the Court has jurisdiction to make such Orders as it considers appropriate in order to alter the interest of the parties to a marriage in relevant property.
The expression, “property”, is defined in sub-s.4(1) of the Act, in relation to the parties to a marriage or either of them as meaning “…property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.”
Pursuant to sub-s.79(2) of the Act, the Court is actively prevented from making such an Order unless it is satisfied that it is just and equitable to do so in all the circumstances prevailing. This follows from the use of the prohibitory words “shall not” in the relevant section.
Sub-section 79(4) of the Act provides the mechanics of how a Court is to make an Order altering marital property interests. It provides seven matters [in paragraphs (a) – (g)] to be considered, as relevant.
In sub-s.79(4) of the Act, paragraphs (a); (b); and (c) categorise contributions made by marital partners, which are relevant. Paragraph (d) of sub-s.79(4) of the Act directs the Court to take into account the effect of any Order upon the earning capacity of either party to the marriage concerned.
Paragraph (e) of sub-s.79(4) of the Act directs the Court to consider a list of matters contained in sub-s.75(2) of the Act, which are germane to spousal maintenance or the prospective positions of the parties, concerned by reference to their respective financial resources, means and needs.
Finally, paragraphs (f) and (g) of sub-s.79(4) of the Act apply to previously made parenting Orders and child support as relevant. There is some overlap between these various provisions and not all will be applicable in every case.
Applicable Legal Principles
The way a Court approaches a property application under s.79 of the Act is, first of all, to follow the principles set out by the High Court of Australia in Stanford v Stanford.[1] In Stanford, the High Court propounded three fundamental propositions at [37] to [40], in adhering to the application of s.79 of the Act, which I will summarise as follows:
[1] [2012] HCA 52; (2012) 47 Fam LR 481; (2012) FLC 93-518
·Firstly, in order to ascertain whether it is just and equitable to make a property settlement Order, it is necessary to identify:
“…according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.”
·Secondly, although the power to make a property Order is broad. The power is not to be exercised according to an “unguided judicial discretion”. As such:
“whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist….”
·Thirdly, whether the making of a property settlement Order is just and equitable does not turn on the assumption that one or other of the parties to the marriage has the right to any interest according to a consideration of the matters (including financial and other considerations) arising under sub-s.79(4) of the Act. Rather the justice and equitable consideration under sub-s.79(2) of the Act must also be considered. For:
“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.”
Orders Sought by Parties
The Orders sought by the Wife are as follows:
“1. That there be leave to proceed out of time with an application under s. 79 of the Family Law Act.
2. That within 12 months of the date of these orders the Wife refinance the real property situated at Property L (“Property L”) into her sole name and the Husband do all acts and things and sign such documents so as to facilitate such refinancing and to transfer Property L to the Wife at the sole expense of the Wife.
3. That in the event that the Wife is unable to refinance Property L pursuant to 2 hereof Property L forthwith be placed on the market for private sale with a reserve to be agreed between the parties and with an agent to be agreed between the parties and upon completion of the sale the proceeds be applied:
a) first to pay the costs, commissions and expenses of the sale;
b) second to discharge the mortgage and any other encumbrance affecting the real property; and
c) third the balance to the wife
4. That in the event that the mortgage falls into arrears and the arrears remain outstanding for more than 30 days Property L shall forthwith be placed on the market as if the 12 months had expired in 3 hereof.
5. That in the event that the parties cannot agree on an agent or a reserve price they shall:
a) in the event of a dispute about an agent jointly seek that the then President of the Real Estate Institute of Victoria (“REIV”) nominate an agent; and
b) in the event of a dispute about a reserve price have the agent appointed by the parties or pursuant to paragraph 5(a) set the reserve.
6. That otherwise both parties retain all property in their possession as at this date including superannuation interests.”
The Orders sought by the Husband are as follows:
“1. That the former matrimonial home being the property situated at Property G (sic) be placed on the market for sale within 14 days.
2. That pending the sale the wife have sole use and occupation of the former matrimonial home and shall pay all outstanding interest payments on the line of credit together with all rates and taxes as they fall due and shall otherwise be responsible for any amounts outstanding as at the day of the making of the orders.
3. That the real estate agent appointed shall be agreed between the parties and in default of agreement shall be determined by the President of the Real Estate Institute of Victoria or his nominee.
4. In the event the wife defaults in executing any document necessary for the property to be placed on the market for sale, or to enable the sale to be completed, a Registrar of Federal Circuit be appointed pursuant to s106A of the Family Law Act 1975 to execute documents in the name of the wife and do all such other acts required to give validity to the orders, upon the filing of an affidavit by the solicitor for the husband, setting out all maters (sic) pertaining to the failure of the wife. The wife shall be liable for the husband’s costs associated to with the application.
5. That within 7 days the wife pay all amounts outstanding on the joint credit card with the (omitted) Bank Credit and do all other things necessary to obtain the closure of the account and the husband will sign any necessary documents as requested by the wife or the bank for the account to be closed.
6. The wife be and is forthwith restrained from making any payments from the (omitted) Bank Line of Credit account number other than payments associated with the mortgage in respect of the former matrimonial home.
7. Copies of accounts for the former matrimonial home paid from the Line of Credit account will be provided to the husband within 7 days of payment and if not related to the former matrimonial home will be adjusted against amounts otherwise to be paid to the wife pursuant to Final Orders made by the Federal Circuit Court upon the sale of the former matrimonial home.
8. The proceeds of sale to be applied as follows:-
a) to discharge the (omitted) Bank mortgage.
b) to pay the costs and expenses associated with the sale.
c) an amount retained in a trust account established in joint names of the parties to satisfy all amounts of capital gains tax.
d) to pay the wife 60% of the balance of the proceeds of sale.
e) that in the event the wife has failed to close the joint (omitted) Bank Credit card the amount outstanding to the (omitted) Bank shall be paid to it from the wife’s 60%.
f) the balance of the proceeds of sale comprising 40% of the net proceeds of sale be paid to the husband.
9. That there be a superannuation splitting order such that the parties interests be equalised.
10. Each party otherwise retain all other assets in their possession or control at the date of the making of the orders.”
Assets and liabilities
The first step is to determine the parties’ matrimonial assets and liabilities at the date of hearing.
The following tables set out each parties’ position:
Wife
Assets
Value
Former matrimonial home at Property L
$460.000.00
Property W
$715,000.00
Holden (omitted) (Husband)
$29,000.00
Mr Holland – Sole Trader (business)
N/K
Total Asset Pool
$924,000.00
Liabilities
Value
Mortgage encumbering Property L
$140.000.00
Total Liabilities
$140.000.00
Net Assets
$1,064,000.00
Superannuation
(omitted) Superannuation (Husband) at January 2015
$42,165.00
(omitted) Superannuation (Wife) at November 2015
$9,353.00
TOTAL
$51,518.00
Husband
Asset
Ownership/Husband/ Wife/Joint
Value
Former matrimonial home - Property L
Joint
$460,00.00
Property W
Husband
$715,000.00
Holden (omitted)
Husband
$29,000.00
Mr Holland – Sole Trader
Husband
$nominal
Total Asset Pool
$1,204,000.00
Liabilities
Ownership/Husband/ Wife/Joint
Value
Mortgage
Joint
$140,000.00
Personal Loan to Mr Holland and Ms A
Husband
$31,000.00
Total Liabilities
$171,000.00
Net Assets
$1,033,000.00
Superannuation
Ownership/Husband/ Wife/Joint
Value
(omitted) Superannuation
Husband
$44,360.00
(omitted) Superannuation
Wife
$6,447.00
Total superannuation
$50,807.00
The Wife’s proposed Orders seek that each party retains their interest in superannuation, whereas the Husband proposes that superannuation be equalised by way of a splitting Order.
Although not readily apparent from the Husband’s characterisation of the assets in the property pool, an issue in dispute is whether the Husband’s inheritance, the Property W property should be treated as part of the legal and equitable interests of the parties at hearing or as a financial resource of the Husband. Furthermore, it has become apparent from the parties’ written submissions that neither the Wife nor the Husband continue to seek to include the Husband’s motor vehicle (the Holden (omitted)) as an asset in the property pool. In addition, the Husband no longer seeks to include as a liability the alleged personal loan from his parents. The Wife submitted that the fact of the Husband’s new car (whatever the source of funds) and the Wife’s requirements for a motor vehicle, demonstrates that the Wife has greater needs than the Husband.
The Husband’s Inheritance
The Wife maintains that the Court should adopt a global approach to the Husband’s inheritance of the Property W property, whereas the Husband urges an asset by asset approach with the Property W property excluded from the property pool and treated as a financial resource and addressed under sub-s.75(2) of the Act.
Both parties rely on the authority in Bonnici & Bonnici (1992) FLC 92 – 272 (“Bonnici”) to press their case. The Wife, in addition, relies on the decision in Singerson & Joans [2014] FamCAFC 238. The Wife submits that in that case, an inheritance was received after separation and relies on the finding of the Full Court at [96] that:
”Despite the timing of the receipt of the inheritance we consider that over this long marriage a global approach is appropriate.”
In Bonnici, the Full Court said [at 79,020]:
“We have no doubt that his Honour was correct in rejecting the submission that these assets were a “resource” and not property. They clearly were property and came into the parties’ hands during the subsistence of the relationship. Indeed, if they had come into their hands subsequently, they would still have retained their character as property. The expression “resource” is and should be confined to those interests which do not fall into the definition of property as such to which the parties have a present entitlement.
The more difficult issue in this case is as to whether the same should be treated differently from other types of property in which the parties clearly have an interest.
The answer, we consider, must depend upon the circumstances of individual cases. If, for example, in the present case, there had been no other assets than the husband's inheritance, but the wife had, as his Honour found, clearly carried the main financial burden in the support of a family and also performed a more substantial role as a homemaker and parent than the husband, then it would clearly be open and indeed incumbent upon a Court to make a property settlement in her favour from such an inheritance.
A property does not fall into a protected category merely because it is an inheritance. On the other hand, if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question.
The other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated, except in very unusual circumstances. Such circumstances might include the care of the testator prior to death by the husband or wife as the case may be or other particular services to protect a property. See In the Marriage of James (1978) 4 Fam LR 401 ; [1978] FLC 90-487 But there was no evidence of this in the present case despite submissions by counsel for the wife to the contrary. Accordingly, we think that in the present case the monies received by the husband from the sale of the freehold and from his uncle's estate should not be brought into account.”
There is no doubt that in deciding whether a global or asset by asset approach should be adopted in a case where an inheritance was received very late in the relationship or after it has terminated, a Court must have regard to the particular circumstances of that case. For example, in Singerson, which the Wife relies on, the Full Court at [94] to [98] identified the relevant circumstances which led it to adopt a global approach:
“94. We have no difficulty accepting that over a period of approximately 15 years cohabitation and a further four years between separation and the trial that the wife made the significantly greater contribution to the property acquired prior to separation. In particular we refer, as did the trial judge, to her greater contribution both in a financial sense and in terms of her care of the home and for the children.
95. The parties’ respective roles remained much the same throughout the entire relationship in every sense. The husband introduced a substantial sum of money late in the marriage and after the parties had separated. This has made a noticeable impact on the property pool.
96. Despite the timing of the receipt of the inheritance we consider that over this long marriage a global approach is appropriate. The contributions the parties made to various components of their assets are assessed carefully and then looked at holistically to arrive at an overall assessment.
97. On this basis and utilising the trial judges’ largely unchallenged findings of fact we would assess the parties’ contributions to all their property to the date of trial as 52.5 per cent in favour of the husband.
98. This assessment acknowledges the initial contributions of the husband and also his post separation inheritance. However, this is more than matched by, inter alia, the considerable contributions of the wife to the family including her post separation contributions.”
Clearly, the Full Court took into account the length of the marriage, together with the Wife’s considerable contributions to the family, both during the relationship and post separation in deciding to adopt a global approach.
There are other authorities which may bear on the facts in this case. In Burke & Burke (1993) FLC 92–356, the Wife received an inheritance after separation which was property to which the Husband had not contributed. The Court held that the inheritance should be excluded from the pool of property to which the equal contributions otherwise applied. In Wall & Wall (2002) FLC 93–110, the Husband had received an inheritance between the date of the judgment of the trial Judge and the hearing of the appeal. In a re-exercise of the trial Judge’s discretion, the Full Court held that the inheritance should not be included as an asset but dealt with as a section 75(2) factor: [25]. In Jarrott & Jarrott (No 2) [2012] FamCAFC 72, when an inheritance was received after the date of separation and the Wife had made no contribution to it the Full Court took the same approach. The Full Court said at [9]:
“In those circumstances, however viewed, and at whichever “step” it is considered, the significance of the inheritance ultimately turns on its impact as a financial resource of the husband pursuant to s 75(2) of the Act.”
The Wife submits that she contributed to the care of the testator in the following way. It is undisputed that the Husband’s brother was very fond of the family dog. Following a family meeting held soon after the Husband’s brother’s terminal illness became apparent, it was agreed that rather than accompany the Wife and the children, the dog should live with the brother. The Wife maintains that $6,000.00 (from the insurance received from a caravan in their joint names) was used for surgery for the dog to enable him to reside with the brother until his death. The Wife also relies on the fact that the Husband’s brother’s Last Will and Testament dated 22 June 2010, was made only shortly before the brother’s demise on (omitted) 2000, there being no Will prior to that date.
The consideration of whether a global approach or asset by asset approach should be adopted to the inheritance received by the Husband after separation is, I acknowledge, being engaged in prior to the assessment of the contributions of the parties under sub-s.79(4) of the Act. This assessment shortly follows. I have had regard to my findings about the parties’ contributions below. Taking into account all of the circumstances, I am satisfied I should adopt an asset by asset approach, excluding the Husband’s inheritance as an asset to be included in the property of the parties. I have decided that, in the circumstances, it is just and equitable to consider this inheritance as a financial resource under sub-s.75(2) of the Act. The circumstances I have had regard to are as follows:
a)I accept that the parties had a long relationship, cohabitating for around 17 years;
b)the Husband received the inheritance some 3 and a half years after separation;
c)I have found below that the contributions by the parties during the relationship were equal and while the Wife’s contributions post separation have been slightly greater, this is not a factor which would move the Court to adopt a global approach;
d)I am not satisfied that the Wife’s contribution to the care of the testator prior to his death was such, as to amount to an exceptional circumstance. No doubt, it was an act of generosity to allow the Husband’s terminally ill brother to have the comfort of the family dog. However, again this is not a factor which would move the Court to adopt a global approach. The relevance of the brother’s Will being made only shortly before his death is not apparent to me.
I am satisfied that the assets and liabilities of the parties at hearing are as follows:
a)the former matrimonial home at Property L, Victoria with an agreed value of $460,000.00;
b)the mortgage encumbering Property L, Victoria is an agreed balance of $140,000.00;
c)the Husband’s entitlement in the (omitted) superannuation fund estimated by the Husband to be $44,360.00;
d)the Wife’s entitlement in the (omitted) Superannuation fund estimated by the Wife to be $9,353.00;
e)the net non-superannuation assets are therefore $320,000.00;
f)the superannuation assets are in total, $53,713.00;
g)the total net asset pool is $373,713.00.
Just and equitable
Sub-section 79(2) of the Act provides that the Court shall not make an Order unless it is satisfied that in all the circumstances it is just and equitable to make the Order. Both parties propose the making of a property Order. The parties’ relationship ended some time ago and the basis upon which they shared ownership of property and finances is over. In the circumstances it is just and equitable to make an Order.
Contributions
Sub-section 79(4) of the Act provides for the consideration of financial contributions and contributions other than financial contributions. Financial contributions are contributions made directly or indirectly, by on behalf of a party, to the acquisition and conservation or improvement of any of the property of the parties. Contributions other than financial contributions are made in the same way, being the contribution by a party to the welfare of the family, including any contribution made in the capacity of homemaker or parent and the effect of any proposed Order upon the earning capacity of either party.
It is appropriate to observe that the assessment of contributions under sub-s.79(4) of the Act is not a numerical or accounting exercise but one that has proper regard to all the circumstances in considering what is just and equitable. In Singerson the Full Court said this at [62] to [63]:
“62. In Dickons & Dickons (2012) 50 Fam LR 244 the Full Court said:
23. We wish also to refer to the approach of the federal magistrate in attributing percentages to differing periods within the relationship, or types of contribution made. There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s 75(2) factors).
24 . There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
25 . Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “…giving over-zealous attention to the ascertainment of the parties’ contributions…” (Norbis v Norbis (1986) 161 CLR 513 at 524) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
26 . The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
63. The desirability of adopting a holistic approach to the assessment of the parties’ contributions was also dealt with recently in Eufrosin & Eufrosin [2014] FamCAFC 191.”
There is no dispute that both parties’ contributions at the commencement of their relationship were minimal. The Husband has always worked as a (occupation omitted) and run a (omitted) business. The Wife initially worked as a (occupation omitted) until the birth of the first child following which she engaged in home duties as well as bookkeeping work for the Husband’s business. The evidence is undisputed that whilst he engaged in the (omitted business) work, she attended to the financial aspects of the business maintaining necessary financial records for taxation purposes and the oversight of invoices and payments of expenses incurred by the business.
It is not disputed that the Husband’s business during the course of the relationship generated a modest income, which because the business was a partnership, enabled the parties to enjoy the benefits (in a taxation sense) of splitting the business income. Through both their endeavours the parties contributed to the maintenance of a family and their home. The Husband contributed by way of direct financial contributions through his work as a (occupation omitted) although it logically follows that the Wife applied her taxation returns, earned through the partnership to the maintenance of the family as well. There is no doubt that the Wife’s significant contribution was by way of her undertaking home duties. Although she contributed to the capacity of the business to earn income in her role as a bookkeeper, I am satisfied on the Wife’s own evidence, that the role she played as a bookkeeper was modest in the sense that it did not equip her to transfer those skills elsewhere to other business. However, her role was necessary to the effective running of the business.
Overall, I find that the contributions of the Wife and the Husband were equal.
A great deal of the hearing was taken up with the parties’ dispute about post separation contributions. It seemed to me that the parties engaged in a forensic accounting task inconsistent with the settled principles that the assessment of contributions is not to be approached as a mathematical exercise but from a holistic point of view. Bundles of bank statements from joint accounts of the parties were tendered by both parties as were “spreadsheets” of expenses for the purpose of convincing the Court that their contribution in the post separation period was a greater one. I must confess that at times I found the cross-examination of these Exhibits confusing and unhelpful as the parties descended to quibbling over expenditures of around $100.00. I accept that the parties may well have felt these things to be important but given the focus of the Court, they were really appropriately described as de minimis.
After separation, the Wife remained in the former matrimonial home with the children until in or around April 2009, when she moved to (omitted), Victoria. During that time the Husband paid the mortgage repayments. It is not clear whether he also paid the utilities for the home as there appears to be evidence in the various bank statements of the Wife making payments in respect of these amounts which ultimately were paid through the home loan. After separation, the Husband moved into his brother’s house which the Husband now owns by way of inheritance.
During the same period, the Husband paid $400.00 in cash to the Wife each calendar month for the maintenance of the children. He ceased paying this amount in or around April 2009, at the same time that he stopped making repayments towards the mortgage over the matrimonial home. No contributions were made by him for the maintenance of the children until October 2011, when he was assessed by the child support agency for payments. In his submissions, the Husband is critical of the Wife for failing to take steps earlier to initiate child support assessment payments. This seems to me somewhat petulant conduct by the Husband. His cash payments for the children ceased when he formed the belief that the Wife’s then partner had moved into the former matrimonial home. It is not clear to me why his obligation to the children ought to have ceased at that time. His obligation to maintain both the children continued until at least 2010, at which point there was a change in the living arrangements of the children. The Wife agreed that, in addition to amounts paid to her in accordance with child-support assessments, the Husband has made contributions such as paying the fees for Y to enrol at a College for the children to attend camps, for items associated with extra-curricular and sporting activities.
The Wife agreed that although X was living with his Father since 2010, she continued to receive Family Tax Benefit and Sole Parent’s Pension until the middle of 2011 for X.
As noted, in 2010 X commenced residing with his Father and since March 2015, when the Mother moved back to Melbourne there has been an equal shared parenting arrangement in relation to Y whilst X lives 75% of the time with his Mother.
The Husband continued to run a (omitted) business changing from a partnership to a sole trader sometime in September 2007. The Wife worked casually for a while in (omitted) in (employment omitted) and presently works casually when she is in (omitted) (one week in every four weeks) as an (occupation omitted).
The Wife claims that she contributed to the conservation, maintenance and improvement of the former matrimonial home by paying for the renovations to the property by way of the transfer of her motor vehicle (valued at $4,000.00) to pay a tradesman and by the application of $10,000.00, which she says she saved from her taxation refunds from the partnership. She says that the renovations took place from around January 2009 to July 2009. Her evidence is that these renovations were necessary in order for her to have the house tenanted. The Husband maintains that the former matrimonial home was 80% renovated, that the renovations were undertaken by the Wife’s partner, that the Wife had offered him the motor vehicle in question for the sum of $1,000 and that, if the $10,000.00 was from taxation refunds, it came from the business partnership and half should have been paid to him.
I am satisfied, having considered the evidence of the Husband in cross-examination, that he agreed that the house required further renovations to enable it to be used as a rental property. I am also satisfied that, when the renovations the Wife had undertaken were put to him, in addition to the completion of a bathroom, he accepted that these were appropriate and reasonable.
In cross-examination, the Wife agreed that the motor vehicle was purchased by the partnership during the marriage and that it was part of the joint funds of the parties. She said that the motor vehicle was transferred to her (then) partner (a (occupation omitted)), who undertook the renovations. An Exhibit was tendered by the Wife in reply (Exhibit W1). The correspondence purports to be from a Mr G, to the effect that he received a Holden (omitted) from the Wife in payment for building works performed over a period of four months in 2009. She said that she would not disagree with the Husband’s evidence that she had previously offered to sell the car to him for $1,000. In cross-examination, the Wife also agreed that the taxation refunds derived from the parties then partnership and that the refunds were joint funds. Notwithstanding the Wife’s concession that the taxation refunds were joint funds, I am satisfied that given the business was a partnership, the Husband likewise would have received taxation refunds for his share in the partnership which were retained by him.
I am satisfied that the Wife, having no option but to vacate the former matrimonial home when the Husband ceased making the necessary payments on the mortgage encumbering the home, took proactive and appropriate steps to bring the house to a state in which it could be rented and to use the income from the rent to enable her to take on the mortgage repayments. I do not accept the Husband’s submissions that an appropriate alternative was to sell the house thereby enabling the parties to retain and benefit from their interests. Whilst there is no evidence, by way of expert valuations, that the value of the former matrimonial home has increased from 2009 to the present time, neither is there any evidence by way of expert evidence that the value of the house remained the same or even deteriorated since 2009. This proceeding is one in which there is from both sides a dearth of expert evidence. The Court must do its best in the circumstances and I am satisfied that it is reasonable to assume that the value of the property increased over the period from 2009 to 2015, particularly with the renovations. Accordingly, I am satisfied that the Wife made contributions to the conservation and improvement of the only asset of the relationship the former matrimonial home. I am satisfied that for this purpose she applied the joint funds of the parties by way of the transfer of the motor vehicle and her own funds by way of the application of taxation refunds she received from the partnership.
The Wife agreed that the mortgage repayments at the time she secured tenants for the former matrimonial home were $859.00 per month and that the rental income was approximately $1,501.00 per month. The rental income was deposited into the (omitted) Bank Home Equity Line of Credit in the parties’ joint names (“the home loan”) (Exhibit H1). The Husband complains that he should have received half the rental income from the full matrimonial home. This position would have rendered the Wife unable to pay the mortgage. The Husband then complains that the Wife has had the benefit of the excess of the rental income over the mortgage repayments, approximately $642.00 per month.
The Husband also claims that the Wife continued to use two (omitted) Bank Visa Cards in their joint names after separation. One credit card number ended (omitted) (Annexure H1) and the other ended (omitted) (Exhibit H3). He said that in November 2010, he paid the outstanding balance and closed the account of the (omitted) Bank Visa Card number ending (omitted). He says that the transactions by the Wife in the period from 2 April 2010 to 30 October 2010, totalled $3,239.65 (Annexure H1). He also claims that the Wife has continued to purchase items for her own benefit using the (omitted) Bank Visa Card number ending (omitted). He claims that this is a contribution that he made to support the Wife in addition to child support assessment payments.
The Wife agreed that she has purchased items using both credit cards post separation. She agreed that her transactions in the period from 2 April 2010 to 30 October 2010 totalled $3,239.65 on the credit card ending (omitted) and that the Husband paid the balance of the account and closed it in November 2010. The Husband later tendered an Exhibit of statements from the (omitted) Bank Visa Card number ending (omitted), for the period of 27 September 2007 to 23 December 2008 (Exhibit H5). It was put to the Wife that over that period, the total of items purchased by her was around $7,000.00. The Wife agreed that this was correct but maintained it was for living expenses for her to maintain the children. In reply, the Wife tendered an Exhibit said to be a spreadsheet of all expenditures using the credit cards for the period since separation until the end of 2015 (Exhibit W3). She gave evidence that she spent around $8,000.00 on the children. No proper explanation was given regarding the Exhibit and I have given no weight to it in my considerations.
The Wife further gave evidence that she transferred monies from the home loan after separation to pay the (omitted) Bank Visa Card number ending (omitted).
Having perused the Exhibits H3, W3 and W4, I am satisfied that there are expenses on both credit cards attributed to her and not the Husband which include costs of utilities and telephone, costs associated with the running and maintenance of a motor vehicle, groceries and purchases from retail outlets. I am also satisfied that during the post separation period the Wife purchased items for herself on the credit card and utilised the home loan to clear the credit card balance. However, even if I accept that from 2009 to the present, the excess in the rental income over the mortgage repayments was a sole benefit to the Wife, that the increase in the mortgage from $132,335.00 to $138,383.00 at November 2015 reflected purchases only benefiting the Wife and that the Wife purchased items on the credit card in the amount of $7,000.00 in 2010 for her use, the total amount over an eight year period does not in my opinion exceed what would be regarded as reasonable living expenses.
The Wife claims that after the parties separated and in the final taxation year of the (omitted business) business (2007/2008), expenses from the business were debited against the mortgage. In his affidavit, the Husband denies this allegation by the Wife and says that from 10 September 2007, he opened a new account in his name – Mr Holland – and the next day he opened a (omitted) account and any materials or supplies purchased by him after that date were paid solely from the Mr Holland account. However, his evidence in cross-examination suggested that in fact expenses for the business were paid by the Wife by Visa card and debited against the home loan in the 2007/2008 financial year. The Wife claims that the total amount of these expenses were $24,932.91. She relies on Annexure ‘H5’, attached to the Husband’s affidavit filed on 13 November 2013 and Exhibits W2, being a bundle of invoices to the Husband’s former business, (omitted business). I am satisfied that in the immediate post separation period business expenses were paid by the Wife using the credit card which was then debited against the home loan. Given the Husband’s evidence, it is more likely than not that this figure was around the amount claimed by the Wife.
The Wife says that there was an agreement between the parties that the proceeds of an insurance claim in respect of a caravan (jointly purchased by the parties during the relationship and destroyed in 2011), be distributed equally between herself and the Husband. She says that the payout was $13,550.00. She claims that the Husband retained the benefit of the payout save for $1,000.00, which he provided to her for the purpose of Y’s birthday. The Wife claims that the residual amount should be treated as an interim distribution of $12,550.00 to the Husband and the $1,000.00 as an interim distribution to herself. The Husband says that the insurers (omitted) paid out the sum of $13,400.00, that he did not agree to divide the proceeds equally, that he had to pay vet fees of $6,000.00 for the family dog which the Wife had left behind and purchase another vehicle as his car had become unrepairable. He said he applied $3,500.00 for that purpose. Accepting that the veterinarian fees of $6,000.00 for the dog were fees both parties were jointly liable for and that $1,000.00 was paid by the Husband to the Wife for Y’s birthday, there nevertheless remains a figure of around $6,400.00 which was retained by the Husband.
Taking into account a range of factors, including the care arrangements for the children, the Husband’s ongoing capacity to generate income and derive benefits from his business (albeit modest income having regard to his income tax returns), the Wife’s limited capacity to earn income while studying for her chosen career, the fact the Wife has been required to live in rental accommodation since 2009 whilst the Husband lived with his brother rent free, the Wife’s action in conserving and improving the former matrimonial home together with the expenses incurred on the parties credit card and the payment of same using the home loan, I am satisfied that in the post separation period the Wife’s contribution was slightly greater than the Husband’s. I am not prepared to allocate a percentage amount to this contribution but I will have regard to it later in an overall assessment of what is just and equitable.
Section 75(2) considerations
The relevant considerations under sub-s.75(2) of the Act are:
a)the age and state of health of each of the parties;
b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
c)whether either party has the care or control of a child of the marriage was has not attained the age of 18 years;
d)commitments of each of the parties that are necessary to enable a party to support (i) himself or herself; and (ii) the children;
e)a standard of living that in all the circumstances is reasonable;
f)the duration of the marriage and the extent to which it has affected the earning capacity of the party;
g)the need to protect a party wishes to continue that party’s role as a parent;
h)if either party is cohabiting with another person the financial circumstances relating to the cohabitation;
i)any child support paid; and
j)any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account.
The Husband is 49 years of age and the Wife is 45 years of age. Both are in reasonable health. The parties were married for a long time, around 12 years and I am satisfied that the Wife’s earning capacity was diminished by reason of her adopting the role of the homemaker during most of the period of the marriage.
The Husband claims that the Wife is able to be gainfully employed as a (occupation omitted) which was her occupation prior to the birth of their first child or alternatively, as a bookkeeper, which she engaged in for (omitted business) during the relationship.
The Wife’s evidence is that she is not able to work as a (occupation omitted) because of an injury she suffered when she was young. She said that whilst working as a (occupation omitted) she experienced significant pain and suffering because of the nature of the work. The Husband’s evidence was that he did not notice the Wife suffering any pain from her work. Moreover, the Wife said that although she worked as a bookkeeper in the partnership, she did not believe she had the skillset necessary to work as a bookkeeper in other businesses.
The Wife said that her ambition was to work full time as an (occupation omitted). She anticipated that in a year’s time (by the end of 2016) she would be able to obtain full-time employment, working three weeks in Melbourne and one week in (omitted). In cross-examination, the Husband accepted that the Wife needs time to obtain suitable employment.
I find that given the time that has elapsed since she worked as a (occupation omitted) and the nature of the bookkeeping she undertook in her Husband’s business, the Wife does not have a capacity to work as a (occupation omitted) or bookkeeper. I am satisfied that she is entitled to pursue her preferred vocation and that this will require a period of time before she is able to engage in gainful employment and generate a reasonable income.
The Husband’s evidence is that his business is still generating the same income as the previous business did during the relationship. He agreed that the income from his business is increasing and likely to increase in the future. I am satisfied that his income will increase and that he will continue to enjoy the benefit of a small business.
I am satisfied that the Husband’s capacity for gainful employment is greater than the Wife’s. He has an established business and has operated a (omitted) business over many years. The Wife has been assiduous in acquiring qualifications in her chosen profession. It will be some time before she establishes herself in this gainful employment. In his submission, the Husband referred to the hourly rates an (occupation omitted) would enjoy and then made calculations about the income the Wife would generate from full-time employment. The Husband submitted that this demonstrated that the Wife will earn a higher income that the Husband. No evidence was given about the going rate for an (occupation omitted), indeed the Wife’s evidence was that the rate would depend on the days and shifts she might be working. I am not prepared to accept the Husband’s submission that the Wife will generate a greater income than he will.
The parties’ children are teenagers, X is about to turn 18 and Y, who lives in a shared care arrangement, is 15 years of age.
The Husband has the benefit of the significant financial resource he received by way of inheritance, the Property W property which he lives in unencumbered. It’s value is at least twice the value of the equity of the only asset of the relationship, that being the former matrimonial home.
The Husband accepted, during cross-examination, that the Wife was entitled to secure a home for her and the children and I agree that this is a reasonable expectation of the Wife.
Taking all of the circumstances relevant to the parties’ future needs and my findings regarding the Wife’s contributions post-separation into account, I am satisfied that it is just and equitable to make an adjustment of 12% in favour of the Wife.
I note that the Wife’s proposed Orders seek that each party retains their interest in superannuation, whereas the Husband proposes that superannuation be equalised by way of a splitting Order. I am satisfied that in the circumstances of this case where the Wife desires to establish a capacity to purchase a home (preferably the former matrimonial home), which is an immediate need, the Wife’s proposed Order in relation to superannuation is the one that is just and equitable and appropriate.
A 62% adjustment to the Wife of the net asset pool of $373,713.00 is $231,702.00. The Wife’s entitlement to superannuation is $9,353.00. Consequently, she is entitled to by way of distribution, $222,349.00.
A 38% adjustment to the Husband of the net asset pool of $373,713.00, is $142,011.00. The Husband’s entitlement to superannuation is $44,360.00. Consequently, he is entitled to by way of distribution, $97,651.00.
Stepping back to consider the amounts derived from the percentage adjustments, I am satisfied that it would be just and equitable to increase the Wife’s entitlement by $7,000.00, which approximately represents the residual amount from the caravan insurance payout retained by the Husband and to round up her entitlement to $230,000.00. This amount is derived by having regard to all the circumstances and adopting a holistic approach. The consequence of this is that the Husband’s entitlement becomes $90,000.00.
The Wife seeks an opportunity to have the former matrimonial home transferred into her name. In the circumstances, I am satisfied that it would be appropriate to make an Order such that, upon payment of $90,000.00 to the Husband, the title of the former matrimonial home is transferred into the Wife’s name.
The Wife seeks, in her Orders, a period of 12 months to enable her time to sort out her financial affairs. I am not prepared to agree to this. The alteration of the parties’ property interest should be finalised within a reasonable time. I find that 90 days is such a reasonable time. If the Wife is not able to make the required payment to the Husband within that time, then the former matrimonial home will need to be sold and the net proceeds distributed in accordance with my decision.
In her written submission, the Wife stated that she is now living in the former matrimonial home, having lost her rental accommodation. Further, she stated that all credit cards in the parties’ joint names have been closed. As the written submission is prepared on behalf of the Wife by her counsel and her solicitor, I accept this information as factual.
Conclusion
For the reasons set out in my judgment, I make the Orders above.
I certify that the preceding eighty (80) paragraphs are a true copy of the reasons for judgment of Judge Jones
Date: 24 June 2016
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