HOPKINS & HOPKINS
[2015] FCCA 2625
•7 October 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HOPKINS & HOPKINS | [2015] FCCA 2625 |
| Catchwords: FAMILY LAW – Property dispute – parties married for just over 3 years – consideration of decision and application of High Court in Stanford v Stanford – parties not co-mingling finances during the marriage – inappropriate to make order adjusting parties property interests – outcome the same even if adjustment were to be contemplated in any event. |
| Legislation: Family Law Act 1975, ss.75(2), 75(2)(o) |
| Stanford v Stanford [2012] HCA 52 Kennon v Kennon (1997) FLC 92-757 |
| Applicant: | MR HOPKINS |
| Respondent: | MS HOPKINS |
| File Number: | MLC 3040 of 2015 |
| Judgment of: | Judge Burchardt |
| Hearing date: | 13 August 2015 |
| Date of Last Submission: | 13 August 2015 |
| Delivered at: | Melbourne |
| Delivered on: | 7 October 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr Mort |
| Solicitors for the Applicant: | Morgan Legal |
| The Respondent: | In person |
ORDERS
The Husband retain for his own use and benefit absolutely, to the exclusion of the Wife, his right, title and interest in the real property situated at Property Y in the State of Victoria (“the Property Y property”) and being the whole of the land more particularly described in Certificate of Title Volume (omitted) Folio (omitted) and the Wife will relinquish all of her right, title and interest in the Property Y property.
The Husband will indemnify the Wife against all payments and liability pursuant to the mortgage registered No. (omitted) and No. (omitted) to the (omitted) Bank (“the Property Y mortgage”) and all apportionable rates, taxes and outgoings of or with respect to the Property Y property of whatsoever nature and kind.
The Husband retain for his own use and benefit absolutely, to the exclusion of the Wife, his right, title and interest in the real property situated at Property C in the State of Victoria (“the Property C property”) and being the whole of the land more particularly described in Certificate of Title Volume (omitted) Folio (omitted) and the Wife will relinquish all of her right, title and interest in the Property C property.
The Husband will indemnify the Wife against all payments and liabilities pursuant to the mortgage registered No. (omitted) to the (omitted) Bank of (omitted) (“the Property C mortgage”) and all apportionable rates, taxes, and outgoings of or with respect to the real property of whatsoever nature and kind. The Husband shall be solely responsible for the payment of any capital gains tax arising out of any sale, now or in the future, for the Property C property and the Husband shall and hereby does indemnify and keep indemnified the Wife against any liability for the same.
The Wife retain for her own use and benefit absolutely, to the exclusion of the Husband, her right title and interest in the real property situated at Property K in the State of Victoria (“the Property K property”) and being the whole of the land more particularly described in Certificate of Title Volume (omitted) Folio (omitted) and the Husband will relinquish all of his right, title and interest in the Property K property.
The Wife will indemnify the Husband against all payments and liability pursuant to the mortgage registered No. (omitted) to the (omitted) Bank (“the Property K mortgage”) and all apportionable rates, taxes and outgoings of or with respect to the Property K property of whatsoever nature and kind.
The Wife retain for her own use and benefit absolutely, to the exclusion of the Husband, her right, title and interest in the real property situated at Property A, in the State of Victoria (“the Property A property”) and being the whole of the land more particularly described in Certificate of Title Volume (omitted) Folio (omitted) and the Husband will relinquish all of his, right, title and interest in the Property A property.
The Wife shall be solely responsible for the payment of any capital gains tax arising out of any sale, now or in the future, for the Property A property and the Wife shall and hereby does indemnify and keep indemnified the Husband against any liability for the same.
The Wife retain for her own use and benefit absolutely, to the exclusion of the Husband her (omitted) Toyota Yaris motor vehicle registration number (omitted) registered in her sole name and the husband will relinquish any right, title and interest thereto.
The Wife will do all such acts and things and sign all necessary documents to transfer to the Husband, at the expense of the Husband, all or any interest she has in the company known as (omitted) ACN (omitted) (“the company”).
The Husband will be solely responsible for and indemnify the Wife and keep her indemnified in respect of all or any liabilities of the company including but not limited to taxation liabilities.
The Husband retain for his own use and benefit absolutely, to the exclusion of the Wife, the following chattel:
(a)(omitted) breadbin.
The Husband return to the Wife the following chattels:
(a)X's Motorbike Helmet, Vest and Trousers.
That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders;
(b)Monies standing to credit of the parties in any joint bank account are to be divided equally between the parties, and the parties shall do all such acts and sign all such documents necessary to close such accounts;
(c)Monies standing in credit of the Husband in any bank account are to become the property of the Husband;
(d)Monies standing to the credit of the Wife in any bank account are to become the property of the Wife.
(e)Each party retain any superannuation benefits belonging to or earned by that party to the exclusion of the other;
(f)Insurance policies remain the sole property of the owner named therein;
(g)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;
(h)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
IT IS NOTED that publication of this judgment under the pseudonym Hopkins & Hopkins is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 3040 of 2015
| MR HOPKINS |
Applicant
And
| MS HOPKINS |
Respondent
REASONS FOR JUDGMENT
Introductory
This is a property dispute between parties who were only married for a short time. They married on (omitted) 2010, having as I find either not cohabited or only very briefly cohabited before that and separated on 6 February 2015 under one roof. As I find, they separated from 9 July 2011 to 16 September 2012. They were thus married for three years and two months in total.
The applicant husband seeks, in effect, that each party retain all assets they brought into the relationship and that they, as it were, retain that which they hold.
The respondent wife seeks that she retain all her own possessions, but that there be an adjustment in her favour out of the husband's possessions. She did not quantify the adjustment, but left that quantification to the Court.
For the reasons that follow, I propose to make the orders sought by the applicant husband.
Uncontroversial facts
The husband was born on (omitted) 1949 and is self‑employed through a company that he effectively wholly owns and controls, namely (business omitted). This company (and the associated employment of the husband) has been under way since 2004.
The husband has four adult children from previous marriages. They do not enter in any significant way into this proceeding.
The wife was born on (omitted) 1963 (husband's affidavit) and is 52 years old (mother's affidavit). She is employed in a variety of (occupation omitted) positions with a gross annual income in excess of $40,000 per year.
The wife has a son, X, born (omitted) 1998 from a short relationship.
The parties married on (omitted) 2010. The husband says they had not cohabited previously, but the wife says they commenced cohabitation on 30 September 2010. In my view, nothing turns on this difference.
On 9 July 2011, on both parties' version of events, the wife moved out of the former matrimonial home, although her son, X, continued to remain living there with the husband.
The wife says that notwithstanding her moving out (and her chattels followed thereafter) she continued, in effect, in the marital relationship until she finally moved back in. The parties have differing dates as to when this occurred. The husband says it was 16 September 2012. The wife says she moved her furniture back to the matrimonial home on 29 August 2012. In the meantime, she had claimed Centrelink benefits while her son was living with the husband, and that either has still to be repaid or will be repaid.
The parties separated under one roof in the matrimonial home in early February 2015. X continues to live with his mother.
The parties' legal and equitable interests – the preliminary point
As the High Court made clear in the case of Stanford v Stanford [2012] HCA 52 at [35]‑[37]:
“[35] It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
[36]
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of
a range of potentially competing considerations. It does not admit of exhaustive definition.21 It is not possible to chart its metes and bounds. And while the power given by s 79 is not
“to be exercised in accordance with fixed rules”,
22nevertheless, three fundamental propositions must not
be obscured.
[37]
First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order
by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of
s 79(1)(a) itself, which refers to “altering the interests of the parties to the marriage in the property” (emphasis added).
The question posed by s 79(2) is thus whether, having regard
to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.”
The second and third matters referred to by the High Court at [38]-[41] do not presently require attention.
The assets of the parties and liabilities of the marriage are as follows (the figures below are from the husband’s case outline and do not appear in themselves controversial):
Asset
Ownership
Husband/Wife/Joint
Value
Property:
Property Y
Husband
$1,050,000
Property C
Husband
$565,000
Property K
Wife
$415,000
Property A
Wife
$450,000
Motor vehicles/boat
Toyota Yaris registration (omitted)
Wife
$7,000
Bank Accounts
Husband’s personal savings account
Husband
$1,482
Businesses
(business omitted)
Husband
$11,000
Total asset pool
$2,499,482
Liabilities
Ownership Husband/Wife/Joint
Value
(omitted) Bank Mortgage (x2) over Property Y
Husband
-$620,100
(omitted) Bank Mortgage over Property C
Husband
-$172,826
(omitted) Bank Mortgage over Property K
Wife
-$400,000
Loan from (business omitted) to Mr Hopkins
Husband
-$58,000
Total liabilities
-$1,250,926
Net assets
-1,248,556
Superannuation
Ownership Husband/Wife/Joint
Value
Hopkins Group Self-Managed Super Fund
Husband
$351,000
Unknown
Wife
$55,000
Total Superannuation
$406,000
It should be noted that the husband's property in Property Y had been bought in October 2004 for $827,000. Its purchase owed self‑evidently nothing to the wife.
The wife owned Property A prior to the relationship also.
Although no date appears to be given for its purchase, the husband already at the time of the marriage owned an investment property in (omitted).
As at the date of the commencement of the relationship, the husband's superannuation in his self‑managed super fund had an estimated value of $255,000 (see husband's trial affidavit), and the wife's superannuation was worth $31,259.
The wife purchased in her own name a property at Property K on 6 March 2015, paid from moneys of her own, and with a substantial mortgage.
As at the date of marriage, the husband obviously owned his business, (business omitted), which included a (omitted) car and the wife owned a Toyota Yaris motor vehicle.
Leaving aside chattels, to which the parties' affidavits pay little attention, it is immediately apparent that the vast majority of the assets now available to the parties were already owned by them before the relationship commenced.
Given the relative brevity of the relationship, even if I were to accept the wife's version of the so‑called separation, it is apparent that the wife's application faces considerable difficulties in crossing the first hurdle raised by the High Court's decision in Stanford.
The materials filed by the parties
The husband's first affidavit filed 13 April 2015 sets out details of the parties' ages and their relationship, which I have already paraphrased. He set out the property as he saw it at the end of the relationship.
He also deposed that he has significantly assisted the wife to renovate her two properties in Property A and Property K on at least three occasions. He deposed that the wife had essentially retained her own moneys throughout the course of the marriage (something the wife concedes in her own affidavit material) and set out details of holidays for which he had paid.
The husband also set out difficulties he was undergoing in relation to prostate cancer and annexed a copy of a letter from Dr J of (omitted) dated 13 February 2015. That annexure shows that the husband has had significant ill health with prostate cancer and concluded:
“Thus at present it is considered that the patient has metastatic prostate cancer and as such his prognosis is guarded, given the recent acceleration.”
The husband's Financial Statement filed 13 April 2015 does not take the matter much further, although I note that his superannuation was then some $351,000.
The wife's first affidavit filed 26 May 2015 sets out background facts. They are largely paraphrased in the uncontroversial facts asserted above. The wife included a certain amount of material alleging multiple prior relationships on the husband's part. This information was clearly designed to throw mud at the husband, but is not in my view of any significance.
The affidavit confirms that the wife moved out of the matrimonial home on 9 July 2011 and shifted her furniture out on 17 July 2011. Nonetheless, she asserted that the relationship essentially continued until 7 September 2012 when she returned the key of the rental property she had been occupying to the agent.
The wife deposed to her current earnings which, on the figures given at paragraph 18, would appear to be something in excess of $45,000. She deposed that:
“For current and future financial years I expect a gross income
of $39,000.”
The wife took issue with the husband's assertion that his income had dropped from $100,000 to $60,000 as a result of his ill health, and I note that in the tax year ended 30 June 2014, the husband's taxable income included reportable superannuation contributions of slightly in excess of $30,000.
Having set out her version of the parties' property at separation,
the wife went on to depose to her expenses during the relationship,
the purchase of jewellery (which the applicant husband had conceded she should retain), and other miscellaneous matters. She disputed the claim that the husband had done substantial work on her properties, and referred to her work as a housewife. It is not necessary to traverse these minutiae in any detail.
The wife put in issue the husband's ill health and his inter‑related earning capacity. She deposed to the difficulties she might herself face in the event that she lost her present employments. She further deposed to suffering from neck pain and back pain, but no medical evidence has been put forward to support any significant ill health.
The wife went on to assert a pattern of insulting and controlling behaviour on the husband’s part, and alleged family violence during the relationship, plainly with a view to sustaining a Kennon argument
(see paragraph 47 of the affidavit).
The wife's contemporaneous Financial Statement shows a gross weekly income of $1,072, made up of $612 wages and $330 of rent (no doubt from the Property A property), and Child Support of $130 per week. Her superannuation is recorded as $53,000.
The wife filed a further affidavit on 24 July 2015 which appends a series of documents purporting inter alia to show the wife's calculations of the parties' financial circumstances.
The final affidavit filed by a party is that of the husband filed 6 August 2015. It does not take the matter much further, despite its size. It should be noted that the husband asserted that the parties essentially had separate bank accounts throughout the course of the marriage, and that the wife retained the majority of her income throughout.
The husband deposed to his metastatic prostate cancer, and also to suffering some degenerative arthritis involving multiple joints and oesophagitis.
The affidavit otherwise is essentially responsive to the wife's affidavit. I note that it is apparent that the parties had a very expensive holiday to (country omitted) and (country omitted) in 2011 and other holidays from time to time, that were clearly predominantly paid for by the husband.
Affidavits filed by the husband's treating medical practitioners support his assertions of ill health, and neither of the two deponents was required for cross‑examination.
An affidavit filed on 6 August 2015 by Mr G, the husband's accountant, purports to show the personal expenditure recorded in the accounts of the parties. In my view, they add nothing to the Court's deliberations.
The submissions and evidence at Court
In his opening, counsel for the husband emphasised the shortness of the marriage – just over three years. He referred to the parties' possessions as at the time of cohabitation. He noted that the husband's superannuation had increased by approximately $90,000 from the commencement of the marriage to its end, and the wife's by $24,000.
He pointed out that the wife had been unemployed for some 18 months during the relationship, and submitted that she was now likely to earn approximately $40,000 per annum, together with investment income from her property.
Counsel referred to the husband’s company's retained earnings, formerly $198,000 and now $133,000, and said that this was retained as a buffer.
The applicant husband was called and adopted his Affidavits and Financial Statement as true and correct.
He deposed as to his business. He owns all save one share in it, and his son who owns that share is not in any way active. He has no subcontractors and, indeed, no contracts now. He said he had some follow‑up work which would see him through to 22 July 2015, but work was now harder to get. Only two to three days work per week is available. He said he might have to retire, and had approximately $20,000 cash in the bank. Deposits in savings accounts were now non‑existent. The company effectively had the retained earnings of $133,000 and the car worth $11,000. His loan account was approximately $58,000 which he owed to the company. Franchise fees would be written off. The company will have to be wound up.
Under cross‑examination by the wife, who represented herself,
it emerged that the husband had put quite substantial investments into his superannuation. This in part explained the reduction in the retained earnings of the company from $198,000 to $133,000.
It should be noted that the husband was an excellent witness who impressed me both as giving truthful responsive answers and being
a good historian.
The wife made an opening. She said that there had been difficulties causing her to leave the matrimonial home in 2011, but said that the parties saw each other regularly for the first few months. Her son had stayed with the husband during this period. She said that after November 2011 she visited the husband again, and they lived as
a couple, having regular sexual relations. She said that from January 2012 onwards she lived there every day. She sought the return of all X’s motorbike gear to her, and the return of a pendant. She said she left it up to the Court to decide what the outcome should be.
Having been sworn, the wife tendered as exhibit R1 an annotated version of paragraph 30 of the husband's trial affidavit filed 6 August 2015 relating to expenditure. She also tendered as exhibit R2 an email to the husband which shows that she has in her possession a (omitted) pottery breadbin sought by the husband, but does not have an (omitted) feather and down quilt.
Counsel for the husband was alert to the indication I gave him very early on in cross‑examination that I was not interested in the dispute the parties were seeking to ventilate about the minutiae of their domestic expenditure, or the cooking arrangements and other domestic offices.
The wife confirmed that the (omitted) pottery breadbin was in her possession, and that she would abide by a Court order in respect of it. She confirmed that the (omitted) feather and down quilt was not in her possession. She sought the return of her son's motorbike helmet, vest and trousers which the husband is prepared to return to the wife.
When taxed with her income, in my view little of any great moment emerged, save that the wife receives rent of approximately $17,000 per annum from the Property A property and Child Support of $529 per month. She bought the Property A property in 1997.
The wife conceded that her superannuation as at the end of December 2010 was worth $31,359.26, and that her most recent statement for 31 December 2014 was $55,109.60 (see exhibits A3 and A4).
The wife conceded that both parties kept their incomes separate during the relationship. She conceded she would have to repay Centrelink claimed while X was living with the father. In respect to the diamond pendant she wanted returned, the wife said it was bought quite a while ago but not given to her. She said she had retained the items set out in paragraph 27 of her affidavit filed 26 May 2015 and left the matter to the Court.
In final submissions, counsel for the husband advanced the argument that pursuant to the High Court's decision in Stanford, there should be no adjustment to the parties' financial circumstances. The wife did not significantly dispute the husband's evidence, and no Kennon argument, nor any argument pursuant to s.75(2)(o) of the Family Law Act 1975 (“the Act”), was made out.
It was submitted that the husband needed his retained earnings in his company as a buffer given his ill health. His direct contributions throughout the relationship had been far greater, particularly bearing in mind the wife's conceded 18 months of unemployment. Further, the husband had looked after X during the marriage when the parties were separated. X had stayed with the husband, notwithstanding the allegations of violence asserted by the wife.
In respect of future needs, counsel stressed the husband's ill health, including not only his metastatic prostate cancer but also his arthritis and related depression.
In final submissions, the wife asserted the marriage had lasted four years and four months. The husband has his business in which he has huge experience. He looks young and energetic. She submitted, in my view with a rather pitiless lack of charity, that it may take 5-10 years for his cancer to spread further. The husband is not dying and can work for a long time. She asked the Court to consider her huge contributions and those of her son, and said that it was just not fair. She asserted domestic violence, but said that the husband used the law to protect his right. The wife said she did not have special skills and at the age of 52 it would be hard for her to get a job, especially given her strong accent when speaking English (she is of (nationality omitted) extraction, having first come to Australia in 1991).
She said her job with (employer omitted) was two days per week casual and was uncertain. She said her Property A property was not sold and she had had no offers and she was still struggling. She could not access her superannuation until she was 58 years old.
Court findings on the facts
I have already dealt with the credit of the husband. He was an excellent witness. The wife, however, I regret to say, was not nearly so convincing. She was argumentative, unresponsive and lacking in insight (her failure to accept the uncontroverted and very serious medical evidence about the husband's cancer condition speaks for itself).
Her assertion that the parties had, in effect, remained married during the separation is not only contradicted by the evidence of the husband, but runs contrary to commonsense. She not only moved out herself and moved in with a friend in another leased property, but she moved all her furniture out as well. It speaks volumes for the force of her Kennon argument and the argument about adjustments to be made in respect of her son and his alleged treatment by the husband. The son, in fact, remained with the husband throughout the period of separation.
Put shortly, where there is any conflict between the evidence of the husband and the wife, I accept that of the husband.
It therefore follows that the parties married following a period of either no or minimal cohabitation beforehand on (omitted) 2010. They were separated between 9 July 2011 and 16 September 2012. The marriage lasted for approximately three years and two months. This was, on any view, a short relationship.
Furthermore, the parties did not co‑mingle their finances. The wife retained hers and applied them in the ultimate to her own needs and ends.
The husband made far the greater financial contribution during the marriage, both because he had a larger income at the time, and also because the wife did not work for some 18 months. The husband also contributed significantly through his care of X while the separation lasted.
I do not propose to waste my time seeking to disaggregate the precise details of expenditure by the parties during their relationship in the minute way they have felt it appropriate to articulate. Both of them contributed as best they reasonably could in the circumstances. The substantial amounts paid by the husband on holidays were doubtless a source of equal gratification to him and the wife at the time.
I am not able to make any findings as to the extent of the value of any work that the husband did on the wife's properties. Although I accept he may have done some, there is simply no means of ascribing any value to any such work that he did.
I fully accept that there was no family violence (save for an assault by the wife on the husband), and the wife's Kennon case must fail totally.
Likewise, although I think I have already dealt with this, the wife's s.75(2)(o) application (which relates to the alleged treatment of her son), must also fail.
In any event, if ever there was a case that cries out for the sort of treatment indicated by the High Court in Stanford, this must surely be it. Both parties had already amassed the vast majority of the assets they now own well prior to their marriage. It is true that the wife has been able to buy another property since separation, but that is scarcely a reason to make a further adjustment in her favour.
Although it puts the matter shortly, in the particular circumstances of this case, it is not just and equitable that there be any property adjustment between the parties.
Alternative approach
Even if I was wrong as to this finding, an application of the standard four‑step methodology would, in the circumstances, produce no different result.
On any view of the matter, the husband contributed far greater to the matrimonial pool. Counsel assessed his contribution at 66 per cent, and I think that that is at least approximately correct. Furthermore, such alteration of the parties' property interests as took place essentially arose through increase in superannuation held by the parties. The husband's was entirely engendered by what, in effect, were capital depletions from his company's retained assets. There is no information as to how it came to be that the wife's superannuation went close to doubling in the five years concerned, especially given her relatively low income.
I would have been minded to give the husband a 15 per cent adjustment for contribution in any event.
Insofar as future needs are concerned it is, of course, the case that the wife has to look after her child at least for several more years. Further, her likely income range is relatively low, although I note the income that she obtains from her investment property. Suggestions that this was going to be sold are not supported by any evidence such as an engagement contract with a real estate agent.
The husband's income is certainly greater than that of the wife, but the thing that shrieks out from the materials is the state of his health. The wife's assertion that the husband's cancer might not deteriorate significantly for another 5-10 years is, on the medical evidence available, not only lacking in charity but clearly wrong.
The retention by the husband of his retained funds is, of course, an asset available to him. The alleged $58,000 loan to his company is something he can simply forgive as a director. Provided the company has no creditors, the winding‑up process is not likely to produce any objection to such a course of action.
In all the circumstances, I would give the husband a further 5 per cent adjustment on s.75(2) factors.
I would also find that the increase in superannuation that both parties have achieved during the relationship, given their totally separated finances and the brevity of the relationship would mean that each party should retain their own superannuation.
In the circumstances, a 70/30 division in favour of the husband would comfortably replicate the result that the Court is going to impose in any event.
Conclusion
For the above reasons, I propose to make orders substantially as sought by the applicant husband. I have drawn orders accordingly.
I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of Judge Burchardt.
Associate:
Date: 7 October 2015
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Family Law
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Property Law
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