Holstead and Holstead

FAMILY COURT OF AUSTRALIA

HOLSTEAD & HOLSTEAD

[2013] FamCA 652

FAMILY LAW – PROPERTY – inheritance – difficulty in distinguishing contribution because of large indebtedness due to lifestyle.
FAMILY LAW – PROPERTY – Gambling – evidence must be clear as to losses.
FAMILY LAW – PROPERTY – Violence – Evidence must show how such problems made contribution more arduous.

Child Support (Assessment) Act 1989 (Cth)
Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)

Bevan & Bevan [2013] FamCAFC 116
Briginshaw v Briginshaw (1938) 60 CLR 336
Cerini & Cerini [1998] FamCA 143
Kowaliw & Kowaliw (1981) FLC 91-092
Mallet v Mallet (1984) 156 CLR 605
Omacini & Omacini [2005] FamCA 195; (2005) FLC 93-218
Stanford v Stanford (2012) 87 ALJR 74; 293 ALR 70
Steinbrenner & Steinbrenner [2008] FamCAFC 193
Teal v Teal [2010] FamCAFC 120
Woollams & Woollams (2004) FLC 93-195

APPLICANT:

Ms Holstead

RESPONDENT:

Mr Holstead

FILE NUMBER:

MLC

1297

2012

DATE DELIVERED:

3 September 2013

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Cronin J

HEARING DATE:

26 and 27 August 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Nehmy

SOLICITOR FOR THE APPLICANT:

Kenna Teasdale Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Hill

SOLICITOR FOR THE RESPONDENT:

Law 24

Orders

That by 4 pm on 25 October 2013, the husband pay to the wife $484,000.
Contemporaneously with the payment in paragraph 1, the wife:
(a)transfer to the husband at his expense, all of her interest in the real property at G Road, Town G;
(b)transfer to the husband at his expense, all of her interest in the real property at X Street, Perth;
(c)provide to the husband, a withdrawal of any caveat lodged with respect to the real property at Lot 1 and 2 L Road, Town Y; and
(d)vacate the said real property at Town G.
Unless the husband makes the payment in paragraph 1 by the date there set out, the husband and the wife immediately thereafter place such of the properties in paragraph 2 on the market for sale and do all things necessary and sign all such documents as may be required to give effect to the said sales.
The terms and conditions of the said sales shall be by agreement and failing agreement, by order of the Court sought upon an application in a case setting out the respective preferred agents, expected reserve and sale prices and expected legal and agent costs and commissions.
That if the husband pays the sum to the wife referred to in paragraph 1 hereof, it is conditional also upon him obtaining for the wife a discharge of any liability that the wife has in respect of any mortgage encumbering any of the properties for which she is jointly liable and thereafter indemnifying her in respect of those mortgages.
Upon the settlement of the sales of the real properties (or such of them as is necessary to give effect to these orders), the sale proceeds shall be applied as follows:
(a)first, to pay any costs, commissions and expenses of the sales;
(b)secondly, to discharge any encumbrance affecting the relevant real properties;
(c)thirdly, to pay any taxes arising from the said sales;
(d)fourthly, to pay to the wife 53% of the net balance less $15,000; and
(e)finally, to pay to the husband the balance.
That forthwith, any joint tenancy in any of the real properties is severed and the parties shall hold their respective interests in those properties on trust for each other pursuant to the terms of these orders.
Pending the final settlement of any of the sales or the payment to the wife of the amount in paragraph 1 hereof, both parties be jointly liable for any mortgage and/or outgoings of or with respect to the properties referred in paragraph 2 (a) and (b) hereof.
That forthwith, the wife retain, and be absolutely entitled to, the interest of the parties in the motor vehicle in her possession to the exclusion of the husband.
That each party retain, and the other relinquish, any interest in any personal property in the possession of that party as at the date of these orders.
That should any party seek costs arising out of these proceedings, that application shall be made in writing by written submission lodged and served on the other party by no later than 4 pm on 13 September 2013 endorsed with the fact that it has been so served and the respondent to any such submission shall have until 4 pm on 27 September 2013 to reply in a similar way and any determination shall thereafter be made in chambers.

BY CONSENT OF THE PARTIES:

The Court being satisfied that the trustee referred to hereafter has been accorded procedural fairness, then pursuant to s 90MT(1)(a) of the Act, the base amount of $57,000 is allocated to the wife from the superannuation interest of the husband in the Nationwide Superannuation Fund.
Whenever a splittable payment becomes payable out of the interest of the husband in the Nationwide Superannuation Fund, the wife is entitled to be paid the base amount referred to in paragraph 12 adjusted and calculated according to Part 6 of the Family Law (Superannuation) Regulations 2001 and there shall be a corresponding reduction in the interest of the husband that he would have had but for these orders.
Paragraph 12 has effect 4 business days after the date of service of these orders upon the Trustee of the Nationwide Superannuation Fund.

FURTHER BY CONSENT:

The husband shall pay all tuition fees for the child E born … 1997 at H School or such other private school as she may attend until she finishes her year 12 schooling or attains the age of 18 years whichever is the later.
Any payments by the husband in paragraph 15 shall be credited against any assessment for child support.

IT IS CERTIFIED BY THE COURT:

That is was appropriate for each of the parties to be represented by counsel and solicitor appearing as counsel.

IT IS FURTHER ORDERED BY THE COURT:

That save as to issues of costs and the matters referred to in paragraph 4 of these orders, the application of the wife filed 2 May 2013 and the response of the husband filed 3 June 2013 are dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Holstead & Holstead 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 MELBOURNE

FILE NUMBER: MLC 1297 of 2012

Ms Holstead

Applicant

And

Mr Holstead

Respondent

REASONS FOR JUDGMENT

Mr Holstead (“the husband”) and Ms Holstead (“the wife”) do not agree on the appropriate way to divide their interests in modest assets after a 19 year marriage. Their dispute has led to this determination.
The husband and wife were married in 1992 and separated in September 2010. There was some question about what occurred between them over the ensuing months after September 2010 but none of that is relevant to my determination.
There are three children of the relationship, two of whom are adults and the child E is 15. There is no relationship between the husband and any of the children. That has led to the wife being solely responsible for E.
Whilst the two adult children are responsible for finding their own way in the world, each still resides at home; neither is entirely self-supporting and the wife has taken on their financial burden.

The issues

There are a number of issues that caused this litigation to proceed. They are:
·    How should a significant inheritance by the husband be treated and what money was indeed received?;
·    Of the money received, what happened to it and of what is known about that money, how does it affect the assessment and weight to be given to the husband’s contribution?;
·    How should the wife’s non-financial contribution be viewed, assessed and given weight bearing in mind the limited role the husband fulfilled both before and after separation?;
·    Was there any, and if so what, family violence in this case prior to separation and if there was, does it affect the determination?;
·    Did the husband spend significant assets and resources of the parties on gambling? Is it quantifiable? How, if at all, does that affect the just and equitable determination?;
·    Is the Court in a position to properly and comprehensively assess the financial position of the husband having regard to the wife’s assertion that the husband has not made comprehensive disclosure of his financial position?;
·    Did the wife forge the husband’s signature on such things as school enrolment forms for the children’s private school? And if she did, does it affect the outcome?;
·    What is a fair assessment of the contributions of the parties?; and
· Should any adjustment be made for the factors set out in s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) if the Court finds that it is just and equitable to make an order altering the parties’ interests in property?

The material relied upon

This case came before the Court in the traditional way and indeed, a first day hearing was conducted in May 2013. Each of the husband and wife was then, and is now, represented by a legal practitioner; in the case of the husband, by his solicitor and in the case of the wife, by counsel.
In May 2013, I ordered the wife to file her affidavit of evidence in chief and a financial statement by 28 June and the husband by 19 July. Both parties were late in filing but neither party took exception to that position and the matter proceeded.
The solicitor for the husband did not lead evidence from the husband to rebut anything said by the wife in her affidavit but it is clear from reading the husband’s trial affidavit that he had read the wife’s allegations and studiously spent time preparing a response in respect of financial matters.
The affidavit material of the parties was modestly simple although the husband presented numerous pages of documents mostly from disclosure by the wife.

The parties as witnesses

Subject to two issues, I accept both parties endeavoured to give honest answers about the history of their relationship. Both were naturally keen to endeavour to explain their answers but neither budged from the position each had adopted. Each was keen for the Court to understand that their memory was the best they could do. In the wife’s case, she said she had blocked out much of what had happened because of the husband’s conduct but when focussed on modest expenditure issues, she seemed to well recall what had happened. In the husband’s case, he said the years before the separation were a “horrible time” where the family was dysfunctional and he paid no attention to what the wife was doing with money. Each of these positions was plausible.
In respect of the husband, he conceded he had not disclosed documents that he should have but explained that as being due to his work and geographic problems; he lives in Western Australia and flies a lot around that part of the continent.
The first issue where I do not believe the husband however concerns his gambling. He said he did not gamble but under cross-examination, admitted that he did. He said it was nothing of consequence and he had not wasted significant sums of money as alleged by the wife. What I found implausible was his statement that he was part of a “scam” at Crown Casino in Melbourne under which he obtained an identity card authorising him to gamble. He maintained that he had then lent that card to numerous people who were gambling (presumably without the authority of Crown Casino) and as a consequence of their gambling, the husband received credits that entitled him to free meals and entertainment. Nothing remotely like any of this was set out in his affidavit. Whilst the husband might be heard to say that he received the wife’s affidavit very late, he long before that knew the accusation about gambling had been made. The wife was clearly advancing a wastage argument yet the husband chose to focus on the wife’s expenditure. The husband conceded the Casino records showed extensive attendances prior to separation at the Casino yet the evidence remained remarkably silent on what money went missing from the parties’ accounts. It is not sufficient to enable an inference that large sums of money were gambled.
The husband did not do himself credit by saying that he did not gamble and then added “at the Casino in Perth”. He well knew what the question was about. He explained that the Melbourne Casino had been on his way home from work and because his home life was so bad, he stayed in the Casino and operated the “scam”. This was at a time when the wife had the three children at home. It was the wife’s assertion that the husband had come home intoxicated, an assertion the husband denied but when pressed, he explained that if he passed out, it was because he was consuming cortisone medication tablets for a body rash and that vomiting was a side effect. He conceded he came home, presumably not all of the time, and passed out.
Whilst the passing out, vomiting and gambling issues were portrayed by the husband as entirely different matters to that which the wife was talking about, I formed the view that the wife was a better historian on that period of the parties’ lives.
The second issue about the husband’s truthfulness concerned his allegations against the wife that she forged his signature on school enrolment applications that committed the parties to significant school fees.
In his affidavit, the husband said the signatures on documents produced by the wife were not his on all three separate documents over a period of years relating to the children. To support his assertions, the husband referred to how the wife had varied the descriptions as to his various occupations on the forms. In what I consider a scurrilous and unwarranted statement, the husband said:
I believe further that [the wife] enrolled our children in such expensive schools to buy herself a place in society.
That is scurrilous having regard to the husband’s own evidence in cross-examination that the children were precious assets. When asked whether he knew the children were going to the private schools, he replied that he did and, added that it was within their budget. For one who professed a desire to assist his children, the accusation against the wife was perplexing. However, the more interesting point was that the wife’s practitioner put to the wife that the signature was not that of the husband and she replied that it was. There was comment by the husband’s solicitor that on any view of the documents, it could be seen that the signature was not that of the husband. That was an inappropriate comment having regard to the absence of evidence by the husband and his simple denials that he signed the forms.
Section 142(1) of the Evidence Act 1995 (Cth) provides that the standard of proof in these proceedings is the balance of probabilities. Section 142(2) however provides that in determining whether it is so satisfied about a particular issue, the matters the Court must take into account include the importance of the evidence and the gravity of the matters alleged. The importance of this particular evidence concerns the credibility of the wife because it was asserted by the husband:
(a)the wife took and has not explained, a large sum of money that is missing; and
(b)there is no foundation to the allegations that he was a gambler and a violent man.
Much therefore hinges on the truthfulness of the wife.
In Briginshaw v Briginshaw (1938) 60 CLR 336 at 361, Dixon J said that when the law required proof of any fact, the tribunal must feel a natural persuasion of its occurrence or existence before it could be found. It could not be found as a result of the mere mechanical comparison of probabilities independently of any belief in its reality. His Honour went on to refer to the need to consider the seriousness of the allegation, the inherent unlikelihood of the occurrence and the gravity flowing from the finding.
Here, the husband admitted not only his absence of control relating to financial matters but that the wife was the instigator and “master” of everything in his life even to the extent that he did not know about the credit cards that were being used.
As mentioned elsewhere in these reasons, the husband said his household was dysfunctional. I find these allegations made by the husband to be serious. I find it is unlikely that the wife would forge the husband’s signature on the basis that it is hard to see what she would gain bearing in mind that it was the joint wish of the parties for their children to attend the relevant schools. It was not suggested by the husband that he did not know these were expensive private schools. Thus, the gravity of such a finding as asserted by the husband would have a flow-on consequence about other financial circumstances of the party where the husband had abrogated his responsibility to the wife. On that basis, I would not draw the inference the husband desired of the Court particularly as he called no corroborative evidence when he could have. Accordingly I do not find the wife forged the husband’s signature.
I find the husband was not truthful about his behaviour relating to gambling and intoxication. The difficulty with both of those matters is that I do not find on the evidence that the parties’ money was lost to the extent that the wife desired the Court to infer nor do I find on the evidence that the wife’s contribution was made more arduous because of the husband’s conduct about violence and alcohol consumption. I do however find on the husband’s own evidence that the wife’s role for some years prior to separation and certainly since it, has been a much greater non-financial role along with that of homemaker and parent than that fulfilled by the husband. That greatly affects the weight given to the parties’ contributions in this particular case.

The early years

When the parties commenced living together, the wife had just completed her teaching training. There was a dispute between the parties on the evidence about precisely when the teacher training was completed. In his evidence, the husband said the wife completed it in the year after they were married but he also said that it occurred when their first child started primary school. Small discrepancies such as that cloud the issue and highlight the importance of the inaccuracy of the husband as an historian.
I find the precise details unnecessary to decide in this case about the early years. The husband was a qualified tradesman who also conducted a part-time business but was also working full-time for a company making transport equipment. There was a dispute between the parties about what income the husband earned from his part-time business but as the husband produced no taxation returns or any other documents to indicate the level, I have concluded that it was not all that significant.
At cohabitation, the husband owned some land at Town Y. Both blocks were bought about the middle of the 1980s. The wife said the properties were encumbered to the Westpac Bank and, prior to marriage, she contributed her savings to the loan. The husband denied that saying he won money in Tattslotto which he used to wipe out the loan. Neither party produced any documents about any of these assertions but particularly the husband, who wanted the Court to understand that this was a contribution made by him to the relationship.
Both parties agreed the Town Y land had been, at some stage, encumbered by the Westpac mortgage. The husband agreed that the wife had some savings even though he did not agree with the amount. Because I found the wife a better historian, I accept her version of facts. Despite that, I find there was no significant difference in their original contributions such that it would warrant a weighting affecting the determination I have to make. The Y land remains solely owned by the husband as it has throughout the entire relationship.

G Property

Not long after the marriage, the husband and wife jointly purchased 21 acres of land at G and developed it as they went along. This purchase was only possible with a mortgage loan from the Westpac Bank. The husband said it was purchased for $81,000 or $82,000 and a loan was obtained from $86,000 but I find that he was guessing. I consider the wife’s research more likely to be reliable.
Significant improvements were done including the conversion of a barn to become the family home. Those contributions were both financial and non-financial and made jointly.
In about March 2010, the indebtedness to the Bank was said to be about $25,000 but by trial, it had risen to $61,000. I am not entirely sure what the significance of the March 2010 date was because in September 2010, before the husband said the funds were borrowed, the joint debt was just over $96,000.
In September 2010, just after the parties separated, the wife asked the husband to agree to increase the home loan with the Westpac Bank to enable home improvements to be done and to enable her to buy a new motor car. The husband agreed to that loan arrangement and signed the necessary documents.
It was clear on the wife’s evidence, which I accept, not only was the car purchased but there were improvements done to the property after a discussion with the husband. It was not entirely clear why the husband agreed to that having regard to the fact that he maintained that the parties were separated.
The husband produced a bank statement to show the loan of $76,000 being made available so there is no doubt that by the end of September 2010 the parties’ joint debt was $173,000. It is not much less now.

The land adjoining G Property

In 2003, a property adjoining G was jointly purchased for $225,000. This too was made possible through a Westpac Bank loan. The parties then subdivided the land and sold all but 17 acres which they then added to the current G home property.
The sold land produced a dispute as to what happened. In his affidavit, the husband said that “the property next door” sold for $203,000. He was sufficiently precise about the statement in his affidavit to refer to actual dollars and cents but then subsequently showed he had drawn conclusions from documents because he said it “would appear” that happened.
It was only in the hearing that the position altered. The husband maintained this $203,000 indeed did not come from the sale of the next door property but rather from a payment he received from his mother’s estate. No document produced by the husband confirmed that, bearing in mind he had produced a variety of statements from his mother’s estate’s solicitors as to what he did receive. He also produced various bank statements showing deposits and precise details were set out in his affidavit as to what he received from the estate. When asked how this quandary could be explained, he said he had been given a cheque only some days before the hearing after he had filed his affidavit. He had received the cheque from his bank and it was for $203,000 and that it came from the solicitors who had acted for him concerning the estate. I find that statement does not establish, to the requisite standard, what he maintained. I do not know, and will not speculate, whether the same solicitors acted for the husband on the sale of the next door property. If the solicitors drew the cheque, one might infer that because there had been a sub-division involved, there must have been a file and surely someone from the solicitors’ office or the bank could have given evidence. None of that was forthcoming. It is also important that the husband also claimed in his evidence that it was the wife who looked after all of the financial matters. At no point did the wife make reference to this money coming from the estate.
The improbability of this money being from the mother’s estate was high. As earlier indicated, proof of the assertion falls on the party making the claim and the husband has not convinced me about this issue. I find it more probable that this was money from the property next door as a result of the sub-division.

The parties’ income during the marriage

During the marriage, the husband had a variety of jobs as a tradesman. As his counsel said, an examination of the bank account showed a variety of credits of varying amounts which were described as wages. The wife was consistently receiving the same amount from the Department of Education. That enables me to conclude that the wife was the source of regular income when she was earning money. The husband obviously contributed his income as well but the amounts varied.
Over a period of about a decade, the wife was out of the teaching profession caring for the children and managing the parties’ home. She returned to teaching in 2002.
In the decade prior to returning to teaching, the wife established a business which operated three days per week and she managed that with her home duties. I shall return to the assessment of that era because it highlights the evidence of both the financial and non-financial contributions of the parties.

Violence and gambling

In the period of years prior to the separation in 2010, according to the husband, the family’s life was dysfunctional. It was during this period that the wife claimed the husband was violent at home and otherwise away gambling. Her evidence was that the husband was “controlling and abusive” and that he was “volatile and aggressive”. To some extent, whilst the husband denied any violence or abuse beyond arguments, he conceded, as earlier mentioned, his absence and his “passing out”. In his evidence about this period, he said that he came home from work and there were times where he slept in his car and simply returned back to work again. He said he came home at times and found that the wife had advertised his tools in the shed and had sold them and he found that this was infuriating.
When questioned about whether he simply opted out, the husband said there was nothing else he could do. He said it was a “horrible” marriage and the confrontation between he and the wife was a nightmare. He said it was a dysfunctional home which was sheer hell. He described it as a nightmare. He said he was on tablets and he was escaping to the Crown Casino with his membership card.
In relation to matters about the control taken by the wife of the financial matters, he said he did not care because his life was in turmoil. He said his wife had wanted complete input and he was not functioning and she did all of the things required including the engaging of lawyers for the purposes of his mother’s estate.
I find the husband was, as the wife described, controlling, abusive and difficult but there is not sufficient evidence to enable me to say how that behaviour impacted on her contribution other than that she had the almost unilateral role in caring for the children, the management of the finances and the care of the home. There is no doubt and I so find, the husband had a limited role in the life of the family. I propose to give the wife significant credit for that contribution but I do not do so on the basis of violence but rather the abdication of responsibility by the husband.
In respect of violence, at the time that the parties separated, notwithstanding the husband’s espoused view in the witness box that he still loved the wife, the Victoria Police were sufficiently concerned about the volatility in the home to apply for an intervention order on behalf of the wife and the children. That order remains. It has been extended indefinitely. The husband has indicated a desire for that to be removed.

The husband’s mother’s estate

In 2007, the husband’s mother died leaving an estate. This gave rise to a dispute about whether the husband was estranged from his family and would not have received any inheritance but for the efforts of the wife.
The wife’s evidence was that there was conflict relating to the distribution of the estate and the husband became more difficult to live with “in the face of this familial conflict”. She said he required her to sort out the problem. Whilst that evidence was challenged in cross-examination of the wife, the husband’s own evidence was that he had nothing to do with any of the problem and indeed, I find, no association with his extended family.
Contemplating what the husband said in his evidence and in particular his counsel’s cross-examination of the wife, it seemed that he wanted an inference drawn that he would have received his entitlement at law regardless of the activities of the wife. That was not the inference I drew from the evidence of the wife. The wife tendered in evidence correspondence involving a solicitor she engaged on behalf of the husband to deal with the issues of the estate but on any view, those issues were modest.
The correspondence shows an active pursuit of the husband’s one-third interest in his mother’s estate by the wife. The husband would have received that interest one way or the other despite the modest disputes that were taking place.
The more important question is what did the husband receive?
In his evidence, the husband said that he received three distributions of $80,000, $22,000 and $533,284.73. He attached a copy of the relevant documents from the solicitor. I have already referred to the fact that he said that he got a fourth payment but I reject that.
It will be seen therefore that the amount received was $635,000.
In her affidavit, the wife said that the proceeds were applied to pay legal fees, discharge accrued outstanding school fees, pay loans taken out whilst the husband was not working and were otherwise squandered on gambling. The latter allegation, as I have already indicated is not support by any evidence that I could see. I was certainly not prepared to draw an inference.
The dilemma is to work out what portion of that $635,000 was used to effectively create wealth such as by the discharge of jointly incurred mortgages that gave rise to the acquisition of a property as distinct from payments of debts for lifestyle expenses that were incurred without the anticipation of such an inheritance.
The starting point is to repeat the husband’s evidence that he left all of the accounting, banking and bill-paying to the wife as she made all decisions regarding money for the family.
Of the money received, over $46,000 went to one of the schools. The husband rhetorically asked how that could have accumulated but I reject any suggestion that that is a justifiable criticism of the wife. A second school was paid $39,565 and again the husband said that he thought that initially seemed to be excessive but when he checked some of the accounts, some of it went to fees payable in advance.
Credit cards with Citibank were then paid totalling $30,781. Again, the husband showed exasperation but I find that the debt level was unsurprising having regard to the wife’s evidence of the involvement of the children in various activities and the very nature of the private school system.
The ANZ Bank credit card was paid $7500.
The Westpac Bank credit card was paid approximately $5000.
The American Express card was paid $6330.
Over a period of six weeks, cheques were drawn of something in the vicinity of $97,000.
Cross-examination of the wife did not enlighten the Court much at all. When specific questions were put to her as to what the payments represented, she was unable to say. She was able to identify a large accrued electricity bill and that it had achieved the height that it had because she could not afford to pay it. Even in circumstances where the parties had received the money from the inheritance, cheques were drawn but bounced.
It would seem that the money was used to wipe out mortgages but that then gave rise to a line of credit which was also used and in the period of eight months in the latter part of 2010, nearly $82,000 was spent on a variety of things including renovations to the home or fulfilling contracts such as the kitchen renovations that had already been committed earlier in the year.
There are large sums of money unaccounted for. As indicated earlier, the wife asserted that this was gambled. The husband was unable to explain what the wife did with the money either save for the reductions of the mortgages. Doing the best I can, I am satisfied that just over $200,000 went from that money into discharging the acquisitional mortgage on the G property but all of the other money is either unidentified expenditure or clearly lifestyle and in particular, school fees. I find that at least $232,000 went in identifiable lifestyle expenses but I am not prepared to find that the other money was put to any good purpose such as might be deemed contribution by the husband through the inheritance save for the $200,000 just mentioned.

The Perth purchase

In her evidence, the wife said that just prior to separation, she and the husband purchased a property in Perth funded from a mortgage loan from the Westpac Bank. That was all that the evidence asserted but it does not adequately describe the situation bearing in mind that the wife said that the parties’ separation was in September 2010. In cross-examination, the wife acknowledged that the contract for the purchase of the Perth property was not signed until December 2010 and indeed, the settlement of the sale occurred in February 2011. I do not understand the significance of the post-separation acquisition but it seems irrelevant to what I have to determine.
It would seem the parties continued some form of association together after September 2010 including having a holiday together and there was clearly an agreement from the husband to spend money on the former matrimonial home and the acquisition of the wife’s motor car. Those expenditures are clearly identifiable in the assets that the parties now have and no doubt have depreciated. To the extent that these amounts may have improved the agreed value of the properties, the evidence does not enable me to say and I will not guess.
Since its acquisition, the Perth property has been rented and/or used by the husband. The rental money was retained by the husband. Although he would like to retain that property in the ultimate settlement, it being in joint names, it would seem unlikely that he could do so because he would not be able to service any mortgage. He was asked in cross-examination whether he wanted to keep it and at best, he was ambivalent.

The credit cards and various accounts

I turn then to the final question of how the various accounts and credit cards were obtained and the credit used upon them.
It was the wife’s evidence that because of the parties’ lifestyle, they had to resort to credit cards and ultimately draw downs on loans. Her position was that the husband knew all about these because they were in his name. The husband’s position was that this was all the wife’s doing.
In his affidavit, the husband laid out the indebtedness already mentioned and the wife was cross-examined about her expenditure which indicated clearly, that the husband had no idea where much of the money went. She detailed significant expenditure on the children. School fees were “$16,000 to $18,000” per child per year. There was considerable expenditure on things such as violin and piano. Not only where there lessons but apparently the instruments were purchased as well.
I find that all of the evidence of the expenditure in the period prior to separation showed the parties did live beyond their means and did live on credit. How that would have ultimately ended up for the parties without the inheritance, is hard to say but I accept it is more likely that they would have had to sell everything and would have been unable to satisfy all of the debt.
The wife was taken to an American Express card used after separation including payments that she made that she could not explain. For example, there was a regular debit for a company that she could not identify. Sadly, neither could the husband. A question arose about an “on-line dating service”. The wife acknowledged one payment but there were clearly more and she was adamant that she only made one. I am not in a position to find that she did make such payments because it is open to me on the basis of the statements to conclude that there were regular debits by some sort of direct debit arrangement. The husband was not in a position to rebut the wife’s evidence. He was receiving the statements.
The wife’s use of the card subsequent to separation was not all that significant and I accept as submitted by counsel for the wife that about $1900 was spent and ultimately paid by the husband. It was the wife’s evidence that some of this money related to the expenses associated with children.

Child support

The wife said that notwithstanding she was receiving family tax benefit A and B, she did not apply for child support. She said she was content with the arrangements that the husband was making because he was paying the mortgage. The husband too was making no specific child support payments but was paying the household mortgage and, as indicated above, payments on the credit card were made subsequent to separation.
The husband’s largesse however has to also be seen in the context of the fact that he was paying the house mortgage but receiving rental from the Y property. His net outlay was relatively modest. He was also receiving the money from the Perth rental or if he was not, he was using the property as somewhere to live.
Having regard to the fact that the husband’s inheritance went substantially towards the payment of lifestyle expenses mostly incurred prior to separation, at a time when he had abrogated responsibility to the wife for the finances, it is hard for me to see how the wife can be criticised for expenditure on the children and their rural lifestyle subsequent to separation.
As for the future, the parties reached agreement that the husband would pay E’s school fees but be given credit for any child support that might otherwise be assessed. That is unlikely to be a problem because the wife has seemed reticent to make an application for child support.

The legal and equitable interests of the parties

Y property

As earlier indicated, the Certificate of Title to the Y property remained throughout the marriage in the husband’s name alone. It was rented out over the years. In 1993, the wife took over the rental management and that continued until recently when the husband appointed an agent. It was common ground that the Y property was worth $350,000 and remains unencumbered. The wife currently has a caveat lodged against that title. In these proceedings, the husband desires to retain Y and although the wife sought its sale, she is not opposed to the husband keeping it if he can afford to do so.

G property

The G property is jointly owned by the husband and wife. Its agreed value was $775,000. There was some controversy about how that value had decreased since its earlier valuation but as both parties agreed on the figure and it is most likely to be sold, the argument is academic. The G property is encumbered to the Westpac Bank to the extent of $162,000. I have earlier dealt with the question of how that debt came about.
As with the Y property, if the husband can afford to pay the wife the appropriate entitlement, he can keep the property. That will also only be possible if the husband obtains a removal of the intervention order which restricts his attendance at that property. There was some discussion in final address about ordering the wife to seek a discharge of that intervention order at her expense but the husband through his solicitor did not press that nor did he press other injunctive issues.

Perth property

This property was acquired as an investment in joint names. Its current value is an agreed $340,000 but it is encumbered by a mortgage to the Westpac Bank cross-collateralised with the other bank indebtedness. The specific indebtedness for the Perth property is $368,000.

The motor car

Although there was initially a dispute about the wife’s car, the parties agreed it should be valued at $15,000 and she will retain it.

Superannuation

The parties agreed on a superannuation splitting order of $57,000 in the wife’s favour. The wife made clear however that she did not accept that the total superannuation disclosed by the husband was accurate.
Even the husband seemed unaware of the correct position saying that he left all of that to his financial advisor. I am satisfied there has not been comprehensive disclosure but considering the possible extent of such another policy undisclosed by the husband, it would seem unlikely that it will be a substantial amount.

What equity do the parties have?

The joint equity in the G property is about $613,000. The equity in Y property is $350,000. The Perth property has a net joint liability of $19,000. The wife has a motor vehicle of $15,000.
In counsel’s summary of the asset position, the wife included some tools of the husband. There is no evidence of value and I propose to simply ignore those on the basis that they are clearly items that the husband uses for his occupation and I have no idea whether they were acquired before or after the parties separated.
In relation to the wife’s car, the husband does not seek its removal or sale.

A global approach

Having regard to the duration of the marriage and the joint general endeavours of the parties as reflected in the more recent acquisition of property, I see no reason to deal with this deliberation other than on a global basis. Additionally, the impact of the inheritance is so clouded because of the lifestyle issue that it hard to identify a discrete increase in equity from it with any certainty. The long relationship and the significant non-financial contributions of the wife to both the Y and G properties make it fairer to approach any contribution globally.
Because both parties sought to approach the matter on a global basis taking into account the various contributions, I find it is just and equitable to make an order altering the interests of the parties in the various properties.

The submissions of the parties

The husband submitted that the division should reflect an ultimate outcome of one-third to the wife and two-thirds to the husband. That was predominantly based upon the inheritance argument.
The wife submitted that the division should reflect an ultimate outcome of 55 per cent to the wife and 45 per cent to the husband. That was intended to reflect the fact that the contributions between the parties had been equal over the period of time and there should be an adjustment in the wife’s favour having regard to the future disparity of earning power between the parties.
I turn then to the legal issues.
The determination of this case is governed by the provisions of Part VIII of the Act. Section 79(2) prescribes that a Court should not make an order unless it is satisfied that, in all the circumstances, it is just and equitable to make that order.
The approach to this was examined by the High Court of Australia in Stanford v Stanford (2012) 87 ALJR 74; 293 ALR 70 which decision was recently considered by the Full Court of this Court in Bevan & Bevan [2013] FamCAFC 116. The attention of the practitioners for both parties was drawn to these decisions.
Section 79(2) amounts to a requirement that the Court’s order must be just and equitable (see Woollams & Woollams (2004) FLC 93-195 and Teal v Teal [2010] FamCAFC 120). As the Full Court said in Bevan (supra), the just and equitable requirement permeates the entire process. In Mallet v Mallet (1984) 156 CLR 605 at 647 Dawson J described this consideration as the “overriding requirement”: Thus, a Court (and particularly here) needs to be careful not to be drawn into a clinical examination of the various movements of money such as to turn the exercise into one of just mathematical evaluations without contemplating all of the contributions and ensuring that whatever order is made, it is just and equitable. That is difficult here where large sums of money were claimed as a specific contribution through the husband’s inheritance and where the evidence was clouded by what happened to that money. Even so, the money contributions provide a value that can be easily quantified but those have to be considered against non-financial contributions (and particularly those of a home maker and parent) which, in this case, were significant because of the husband’s unwillingness to assist both before and after separation.
Whilst in Mallet (supra), Gibbs CJ described s 79 as conferring a very wide discretion to make such order as it thinks fit, at some point, the assessment exercise has to move from the qualitative to the quantitative (see Coleman J’s remarks in Steinbrenner & Steinbrenner [2008] FamCAFC 193)
Three “fundamental propositions” were mentioned in Stanford:
1.Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by common law and equity);
2.The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity;
3.A determination that a party has a right to a division of property fixed by reference only to the matters in s 79(4), and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements.
It is clear in this case that it is just and equitable to make an order because:
(a)from the husband’s perspective, his contributions through the inheritance are not adequately reflected in the titles to the jointly owned properties; and
(b)from the wife’s perspective, her non-financial role and contributions are not adequately reflected in the titles and interests in not only the jointly owned properties but also that at Y over which she had management control because of the abrogation of the husband for a long time.
An assessment of the various contributions therefore requires a consideration of the provisions of s 79 of the Act. That statutory requirement sets out that the Court must consider:
·the parties’ financial contributions to the acquisition, conservation or improvement of any of the property of either of them;
·the parties’ other contributions to the acquisition, conservation or improvement of any of the property of either of them;
·the parties’ contribution made to the welfare of the family;
·the effect of any proposed order upon the earning capacity of either party;
·the matters referred to in subsection 75(2) so far as they are relevant;
·any other order made under the Act affecting a party to the marriage or a child of the marriage; and
·any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
For the purposes of the first “fundamental proposition”, I have set out the interests of the parties. Whilst I have recognised the wife’s potential equitable claim to the Y property, it is not necessary for me to delve into that further because the parties agree that the husband will keep it but I am to take it into account as part of the determination of what sum is to be paid to the wife.
Having regard to the findings I have made above and the assessment of the respective parties’ various contributions to which I shall turn below, it would not be just and equitable if an order was not made varying their respective interests in the property laid before the Court.
By reference to s 79(4) and based on the matters set out above, I find as follows:
(a)the husband’s financial contributions to the property described in these reasons were greater than that of the wife because of the inheritance. However, as indicated, out of the $630,000 or thereabouts, only about $200,000 went towards assets where the parties’ equity was increased or altered;
(b)the wife’s non-financial contributions to that same property were greater than those of the husband because she managed the finances, managed the rental arrangements and organised the completion of the inheritance claim. I find that was time consuming whilst she was otherwise engaged in employment and caring for the children and the household;
(c)the wife’s contribution made to the welfare of the family was overwhelmingly greater than that of the husband because of his absence in the years prior to the separation and the period since that time;
(d)insofar as they are relevant, the matters referred to in subsection 75(2) indicate that:
(i)the husband has a greater earning capacity than the wife;
(ii)the wife has the responsibility for the care of the child E and will have for some years;
(iii)the wife has the responsibility to assist the two adult children at least for a short time into the future;
(iv)the terms of the proposed financial orders will still only leave each of the parties, but particularly the wife, with a modest amount of money; and
(e)the husband will not be providing child support under any assessment because none has been sought by the wife, she having accepted that the husband is contributing to significant private school fees and that otherwise, the wife will be required to provide the financial support for E.
In making this determination, I have also taken account of the fact that the parties agreed on a superannuation splitting order. Whilst the wife did not accept that that was an equalisation, and I accept that it was not, the further alteration was not sought. Thus, any alteration of property interests must be made against the other known non-superannuation property. Here, I would make no further adjustment because the wife will have sufficient opportunity over the ensuing years to retirement to add to the modest sum she will have after the various orders are made.
In their respective documents setting out the parties’ current liabilities, each described what could only be understood as individual liability for loans and credit cards. Those were factored into their respective calculations but in my view, there has been almost three years since the parties separated and if they have neither adjusted their lifestyles nor sought specific orders for maintenance, it is not appropriate to do more than take into account the fact that these debts exist and will have to be paid out of what the parties have got. I find that it would not be just and equitable to inflict the wife’s personal debts upon the husband.
In his outline document, the husband referred to household effects which he had listed at $25,000. No valuation of those assets was attempted let alone provided. It is not appropriate for this Court to guess at what the respective legal and equitable interests are in property let alone just pluck a figure out of the air as to value. I do not therefore propose to take those into account.
By a mathematical approach in his outline document, the husband set out how he saw the division of a “pool” of assets. Despite the fact that in final address, the husband’s solicitor (at my invitation) concentrated on a notional division of about $900,000, I must make mention of the calculations of the husband which included (apparently) a notional adding back such things as a share of mortgage and rate payments since separation, a contribution towards credit card payments and a large electricity account paid by the husband. Leaving aside any obligation that the husband may have had to support the wife and children (and that was not argued by her), I have understood the husband’s evidence to be that as much as he was horrified about the state of the financial indebtedness, he paid these things. Thus, the money has gone. The question is whether something of those payments should be taken into account as part of any division.
To do some form of “add back” to “the pool”, I would be dealing with something which is not property. While s 79(4) and in particular s 75(2)(o) gives scope to deal with unilateral disposal of property, this is not a case where that should occur. The husband had every opportunity to decline the wife’s expenditure and even prevent it. In evidence, he did not seem really concerned about it.
In Omacini & Omacini [2005] FamCA 195; (2005) FLC 93-218, three categories of circumstances were discussed where it was thought appropriate to make some adjustment for property unilaterally removed from the other party. Those were expenditure on legal fees, a premature distribution of assets and in the wastage circumstances outlined in Kowaliw & Kowaliw (1981) FLC 91-092. The authorities emphasise that, without seeking to place a fetter on the exercise of discretion by the trial judge in individual cases, the concept of adding monies recently disposed of back into the pool ought to be the exception rather than the rule.(see Cerini & Cerini [1998] FamCA 143)
The principle from those authorities is that parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. The same must be said of the husband having continued to support the wife and family’s lifestyle as had been occurring prior to separation. It may be that those are contributions made by him but that has to be seen in the context of an obligation he had at least towards the children.
Accordingly, as the case unfolded, the mathematical balance sheet approach of the husband became less helpful or relevant and in this case, I do not propose to do more that note that those items indicated how the husband approached the division of the property. In my view, to do the division that way would not be just and equitable.
It having been found that it is just and equitable to alter the interests of the parties in their property, then by reference to s 79(4) of the Act, the findings require the alteration of property interests to significantly favour the wife.
Because of (a), (b) and (c) in paragraph 101, I would divide the interests of the parties in the property generally but excluding the superannuation as to 60 per cent to the husband and 40 per cent to the wife but because of the matters in (d) and (e), I would give the wife a further $125,000 from the husband’s share.
As an overall division, it is necessary to set out percentages here because it is probable that one or more of the real properties will have to be sold. Converting the dollars into percentages is not a precise science nor should it be but I find that such an adjustment of the known assets of the parties amounts to about 53 per cent to the wife and 47 per cent to the husband.
In my view, that is a just and equitable outcome and I accordingly make the orders at the commencement of these reasons.
I indicated that to avoid significant costs for the parties have to again attend court, I would make provision for any costs applications to made in writing and for those issues (if any) to be determined in chambers.

I certify that the preceding One Hundred and Fourteen (114) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 3 September 2013.

Associate:

Date: 3 September 2013

[2013] FamCA 652

3 September 2013

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Family Law

Equity & Trusts

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