HURST & HURST
[2017] FamCA 579
•7 July 2017
FAMILY COURT OF AUSTRALIA
| HURST & HURST | [2017] FamCA 579 |
| FAMILY LAW – PROPERTY SETTLEMENT – Contributions – Long marriage – Where the most valuable asset is vacant land inherited by the husband – Where the husband has a greater earning capacity – Where the husband seeks to obtain a development approval for the vacant land he inherited – Where the wife seeks the sale of the former matrimonial home |
Family Law Act 1975 (Cth), ss. 75, 79
Bevan & Bevan (2013) FLC 93-545
Bonnici & Bonnici (1992) FLC 92-272
De Winter & De Winter (1979) FLC 90-605
Kessey & Kessey (1994) FLC 92-495 at 81,850
Norbis v Norbis (1986) 161 CLR 513
Stanfordv Stanford (2012) 247 CLR 108
| APPLICANT: | Ms Hurst |
| RESPONDENT: | Mr Hurst |
| FILE NUMBER: | BRC | 6748 | of | 2016 |
| DATE DELIVERED: | 7 July 2017 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Carew J |
| HEARING DATE: | 22 May 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Conrick |
| SOLICITOR FOR THE APPLICANT: | D M Wright & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Sorensen |
| SOLICITOR FOR THE RESPONDENT: | Hurst Lawyers |
Order
Upon the continued undertaking of Mr Hurst not to sell, dispose, encumber or in any way deal with his interest in the property at B Street, Suburb C in the State of Queensland more particularly described as Lot … on Registered Plan … without the written consent of Ms Hurst or order of the court and to keep Ms Hurst informed of any negotiations or discussions he may have with third parties regarding any sale or disposal of the said property including any verbal or telephone conversations.
it is ordered
The property of the parties as identified in the attached schedule is to be divided in the proportions of 60 per cent to the husband and 40 per cent to the wife.
In order to give effect to paragraph (1) herein:
Subject to this order and the husband’s undertaking set out above, the husband shall take all necessary steps to sell the property at B Street, Suburb C (described as Lot … on RP …) (“the Suburb C property”).
The husband shall forthwith pursue the expression of interest made by D Pty Ltd (“DPL”) in purchasing the Suburb C property as contained in its letter to the husband dated 8 April 2017 (a copy of the letter is annexed and marked with the letter “C” to the affidavit of the husband filed 17 May 2017).
Unless the husband and wife otherwise agree, the following conditions shall be offered to DPL:
(a) Purchase price of $1,820,000 inclusive of GST if applicable;
(b) Deposit payable upon exchange of contracts of 1 per cent of the purchase price rising to 5 per cent of the purchase price once the contract becomes unconditional payable to the trust account of D.M. Wright & Associates Solicitors.
(c) Settlement to take place within 60 days of the conditions of the contract becoming unconditional;
(d) Purchaser to be D Pty Ltd or its nominee;
(e) Contract to be completed by 31 January 2018, or such extended date as the parties agree, time to remain of the essence;
(f) The contract is terminated if the contract is not complete by 31 January 2018 or any agreed extended date.
Should the parties not have obtained a signed contract from DPL by 16 August 2017 or such earlier or later time as agreed by the parties, the husband shall list the Suburb C property for sale.
Should it be necessary to list the Suburb C property for sale the arrangements for the sale shall be as follows:-
(a) The husband shall list the Suburb C property with three (3) Real Estate Agents as agreed between the parties or failing agreement nominated by the Chief Executive Officer of the Real Estate Institute of Queensland or her nominee;
(b) The listing price shall be as agreed between the parties and failing agreement the average of the listing price recommended by the Real Estate Agents from time to time;
(c) The Suburb C Property be listed for sale by private treaty with the Real Estate Agents.
In the event that the Suburb C property has not been sold by 31 January 2018, the parties shall either agree to extend the time for the property to be sold by private treaty or failing agreement the husband shall make all such arrangements and do all such acts and sign all such documents necessary to procure a sale by public auction of the Suburb C property upon the following terms:
(a) The auctioneer shall be a Real Estate Agent as agreed between the parties and failing agreement nominated by the Chief Executive Officer of the Real Estate Institute of Queensland or her nominee;
(b) The auction shall take place within six (6) weeks after the deadline date for sale by private treaty;
(c) The reserve price shall unless agreed upon by the parties be as determined by the auctioneer;
(d) The Husband shall be responsible for payment of all of the auction expenses payable before the Suburb C property is auctioned, on the basis that the auction expenses paid by the Husband will be refunded to him from the proceeds of sale of the Suburb C property.
In the event that the Suburb C property does not sell at the auction referred to in the preceding paragraph, the husband shall make all such arrangements and do all such acts and sign all such documents necessary to procure a sale by public auction of the Suburb C property upon the following terms:
(a) The auctioneer shall be a Real Estate Agent as agreed between the parties and failing agreement nominated by the Chief Executive Officer of the Real Estate Institute of Queensland or her nominee;
(b) The auction shall take place within six (6) weeks after the first auction;
(c) There will be no reserve price;
(d) The Husband shall be responsible for payment of all of the auction expenses payable before the Suburb C property is auctioned, on the basis that the auction expenses paid by the Husband will be refunded to him from the proceeds of sale of the Suburb C property.
Upon settlement of the sale of the Suburb C property the proceeds of sale shall be applied as follows:-
(a) to pay any real estate agents commission;
(b) to pay any reasonable legal costs of sale;
(c) to reimburse the husband for any upfront marketing or auction costs paid by him;
(d) an amount set aside in the Trust Account of a solicitor nominated by the husband sufficient to pay the Australian Taxation Office the Capital Gains Tax (“CGT”) payable on the sale of the Suburb C property;
(e) the amount of $4,000.00 is to be paid to Mr E Hurst;
(f) the remaining funds (“net proceeds of sale”) shall be disbursed as follows:
(i)The wife shall be paid an amount of $X calculated in accordance with the following formula:
$X = [(A + B) x 40 per cent] - C
Where:
A is the net proceeds of sale; and
B is the sum total value of the property of the parties as set out in the Schedule attached hereto; and
C is the sum total of the property to be retained by the wife as set out in the Schedule attached hereto; and
(ii)The husband shall be paid the balance.
To enable the calculation of CGT on the Suburb C property the Husband shall provide to the Wife (by provision to her solicitors D.M. Wright & Associates Solicitors) any information or documentation in his possession, power or control relating to the calculation of CGT upon the sale of the Suburb C property.
Upon sale of the Suburb C property and contemporaneously with the payment of the sum referred to in paragraph (9) herein the wife shall transfer to the husband all her right title and interest in and to the property at F Street, Suburb G in the State of Queensland, more particularly described as Lot … on Registered Plan …, being the whole of the land contained in Title Reference … (hereinafter referred to as the “former matrimonial home”).
Pending the transfer of the former matrimonial home as referred to in paragraph (11) herein the husband shall be solely responsible for the rates, insurances and other usual outgoings in relation to the property.
Upon request the husband make available for collection by the wife or her agent her chattels and possessions stored at the former matrimonial home in the front bedroom adjacent to the kitchen.
If not already attended to the wife shall forthwith do all things and sign all documents necessary to remove the caveat lodged on the title of the Suburb C property.
Each party do all things and sign all documents necessary to give effect to this Order.
All extant applications are otherwise dismissed.
In the event that the parties are unable to agree in writing within 21 days of today what costs Order, if any, might be made regarding the costs of and incidental to the property proceedings:
(a) Each party file within a further 14 days written submissions in respect of that issue; and
(b) Unless either party otherwise therein contends to the contrary, that issue be determined in chambers without the necessity of further appearance by either party.
In the event that the parties reach agreement in writing on the issue of costs, they are at liberty to file jointly, minutes of consent via e-mail to the Associate to Justice Carew.
Schedule to the order made 7 July 2017
Asset To be retained by Agreed value H Street Suburb G husband $ 1,000,000.00 Sedan Motor vehicle husband $ 2,500.00 Utility Motor vehicle husband $ 1,500.00 Vintage sports car husband $ 65,000.00 Vintage car husband $ 6,000.00 Other vehicles husband $ 20,000.00 Business account husband $ 8,664.00 1300 Suncorp shares husband $ 18,642.00 Coupe motor vehicle wife $ 11,500.00 Jewellery, collectibles, toys wife $ 4,000.00 Suncorp Bank account wife $ 448.00 Sum Total $1,138,254.00
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hurst & Hurst has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC 6748 of 2016
| Ms Hurst |
Applicant
And
| Mr Hurst |
Respondent
REASONS FOR JUDGMENT
Ms Hurst (“the wife”) and Mr Hurst (“the husband”) are in dispute about how to divide their property after a thirty-eight year marriage. The wife seeks a division in her favour of 65/35 and the husband seeks a division in his favour 60/40.
background
The parties married in 1978 and separated in 2016. They have four children, Mr J aged 35, Ms K aged 32, Mr L aged 24 and M aged 13.
The wife is 56 and the husband is 66.
The wife is unable to work due to a number of medical conditions and she cares for M and Mr J who suffers from a serious mental illness and receives a disability pension. Her sole source of income currently is Centrelink. During the marriage the wife undertook some income earning ventures with modest returns. She was the main homemaker.
The husband is a professional in a small business. This business which commenced in 1997 has provided a modest income. Prior to that he was a public servant. His capacity to support the family was supplemented by the sale from time to time of inherited property and gifts. He was the main breadwinner.
At the commencement of the marriage the husband had an interest in a residential property subject to a mortgage. The wife had some modest savings. Each party has received inheritances during the marriage but the husband’s inheritances and gifts far exceed the wife’s. In 2003 he inherited vacant land at Suburb C which now has an agreed value of $1,800,000 and represents about 60 per cent of the current asset pool. There has been a significant accretion in its value since 2003 when it was worth $400,000. There has been a further accretion since separation of about $300,000.
Currently the husband and Mr L live in the former matrimonial home and the wife and Mr J and M live in rental accommodation. The parties entered into a parenting plan in relation to M in April 2017 pursuant to which M spends time with the father.
On 20 March 2017 an order was made by consent that the husband sell one half of his Suncorp shares and pay the proceeds of sale to the wife. The wife received about $25,000 as a result.
how property applications are determined
The High Court has often stressed that the discretion exercised pursuant to s79 of the Family Law Act 1975 (Cth) is extraordinarily wide.[1] That said it must be exercised in accordance with legal principle.[2]
[1] De Winter & De Winter (1979) FLC 90-605; Norbis v Norbis (1986) 161 CLR 513; Stanfordv Stanford (2012) 247 CLR 108.
[2] Ibid.
The starting point is to consider whether it is just and equitable to make an order at all, by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.[3] In exercising the discretion conferred by s79 it should be borne in mind that there is no presumption that the parties’ rights to or interests in property are or should be different from those that currently exist.[4] The consideration of whether it is just and equitable to make an order should not be considered by reference only to the matters in s79(4).[5]
[3]Stanford (supra)
[4]Stanford (supra)
[5] Stanford (supra); Bevan & Bevan (2013) FLC 93-545.
The Full Court in Bevan observed that while the High Court did not disapprove of the ‘four step process’ neither did it approve of it. The Full Court noted:
71. Stanford will also serve as a reminder that the four step process “merely illuminates the path to the ultimate result”. Any future restatement of that process should incorporate acceptance of the fact that the power to make any order adjusting property interests is conditioned upon the court finding that it is just and equitable to make an order.
If it is considered just and equitable to make an order the Court will have regard to a number of matters in determining what particular order to make. Those matters include the contributions (both financial and non-financial) made directly or indirectly to the acquisition, conservation or improvement of property and the contribution made to the welfare of the family. In addition, the Court will have regard to such matters as are relevant in s 75(2) of the Act.
Is it just and equitable to make an order?
The assets of the parties are reflected in the table below:
| Asset | Owner | Agreed value |
| H Street Suburb G | joint | $ 1,000,000.00 |
| contents | joint | $ 3,000.00 |
| B Street Suburb C | husband | $ 1,820,000.00 |
| Sedan motor vehicle | husband | $ 2,500.00 |
| Utility motor vehicle | husband | $ 1,500.00 |
| Sports motor vehicle | husband | $ 65,000.00 |
| Vintage motor vehicle | husband | $ 6,000.00 |
| other vehicles | husband | $ 20,000.00 |
| Business account | husband | $ 8,664.00 |
| 1300 Suncorp shares | husband | $ 18,642.00 |
| Coupe motor vehicle | wife | $ 11,500.00 |
| jewellery, collectibles, toys | wife | $ 4,000.00 |
| Suncorp Bank account | wife | $ 448.00 |
| Subtotal | $ 2,961,254.00 | |
| Liabilities | ||
| inheritance owing to Mr L | joint | -$ 4,000.00 |
| CGT (estimate) | husband | -$ 300,000.00 |
| Total estimated liabilities | -$ 304,000.00 | |
| Net assets (estimate) | $ 2,657,254.00 |
This is one of those cases identified by the High Court in Stanford[6] where the just and equitable requirement is readily satisfied because the parties are no longer living in a marital relationship and there will no longer be the joint use of property and there were no express and implicit assumptions underpinning the property arrangements in existence at the time of separation.
[6] Ibid at [42]
Contributions
During this very long marriage each party made contributions both financial and not financial and to the welfare of the family although the husband was the main breadwinner and the wife was the main homemaker. The husband had an interest in a property at the commencement of marriage which assisted the parties in acquiring other property during the marriage. From time to time the husband sold property he had inherited or been gifted during the marriage in order to supplement the modest income he earned from his employment. The wife provided significant homemaker contributions particularly having regard to the challenging requirements of Mr J at times. Subsequent to separation the husband has had the benefit of remaining in the former matrimonial home and the wife has rented accommodation. She has also continued to care for two of the children with little assistance from the husband. It seems the husband and Mr J have a fraught relationship.
Each party received inheritances throughout the marriage which were in large part used for the benefit of the family (other than the Suburb C property). The husband also received gifts from his family which were used for the benefit of the family. The most significant inheritance was received by the husband in 2003 in the form of the Suburb C property. Apart from paying the rates and regular slashing the land has remained untouched. It cannot be said that the wife has made any contribution to this property other than indirectly by the rates and slashing costs being paid. The Suburb C property has appreciated in value over the years and even after separation. This property is now the most valuable asset of the parties.
As the Full Court held in Bonnici & Bonnici[7] an asset does not fall into a protected category just because it was inherited. Neither party suggested otherwise. Indeed they each adopted a global approach. Inheritances and gifts are generally treated as contributions made by or on behalf of the person receiving them unless there is a clear intention that the inheritance or gift was to both parties.[8]
[7] (1992) FLC 92-272
[8]Kessey & Kessey (1994) FLC 92-495 at 81,850
The Suburb C property was received fourteen years ago. Money that would otherwise have been available for the benefit of the family has been used to maintain the property by the payment of rates and slashing but given its current value those payments could not be regarded as anything other than modest.
Since separation the wife has received about $25,000 from the sale of shares. There was no suggestion that that sum should be notionally added back into the asset pool and given her modest circumstances I consider that to be a sensible concession by the husband.
Overall I assess the contributions as favouring the husband 72.5/27.5 per cent.
S 75 (2) factors
The wife is 56 years of age but unable to undertake employment due to a number of medical conditions. She also has the care of Mr J and M. While M can be expected in time to be independent, it is likely that Mr J will require some ongoing assistance although he receives a disability support pension and has some financial independence. The wife has no superannuation and receives little assistance from the husband, either financial or practical, in the care of Mr J and M. He does of course spend time with M as agreed.
The husband is 66 years of age and although he intends to continue practising as a solicitor his income has only ever been modest, although it is more than the wife’s Centrelink benefits. He has no superannuation. He pays little, if any, child support.
In my view the s 75(2) factors warrant a significant adjustment in favour of the wife and I assess that to be 12.5 per cent.
The wife’s overall entitlement will therefore be 40 per cent.
Overall justice and equity
On the estimated net pool the wife will received in the vicinity of $1,063,000 and the husband $1,594,000. The differential in the husband’s favour will be in the vicinity of $530,000. I consider that to be a just and equitable outcome and will enable the wife to house herself and the children living with her and provide a sum for investment.
Form of order
As the parties had different views about the form of order for sale of the Suburb C property I gave them an opportunity to confer in an attempt to reach agreement about the terms upon which such sale should occur. They were unable to agree and each submitted a form of order. The parties also remain in dispute about whether the former matrimonial home should be sold.
Both parties consider that the best means of obtaining the optimal sale price for Suburb C is to permit a sale by private treaty if at all possible.
The husband wants time to obtain a development approval for the Suburb C property before its sale. He argues that the realisation price is likely to be greater if that course is taken. He proposes that the property only go to auction if a sale has not occurred by October 2017.
The wife opposes the husband obtaining a development approval prior to sale. It is submitted on her behalf that the costs of such a proposal are considerable and there is no guarantee that the effort will reap a significant or any benefit to the parties. The wife proposes that the parties negotiate with a potential purchaser who has expressed an interest in purchasing the Suburb C property and if it is not sold by 31 January 2018 it go to auction.
Mr N provided a valuation for the Suburb C property and was cross-examined by the parties about the impact of the development approval on the sale prospects of the Suburb C property. He gave an estimate of $100,000 to $150,000 for obtaining a development approval. He considered it likely that a sale with development approval would increase the sale price and estimated an increase of between 10 to 20 per cent of the pre-development approval value (in this case between $182,000 and $364,000).
In order to address the current impecuniosity of the wife the husband proposes to borrow a maximum of $210,000 for the purposes of meeting the costs of the development approval; retaining $30,000 for upfront marketing costs and dividing the balance between himself and the wife. In order to obtain the loan he seeks an order that the wife’s interest in the former matrimonial home be transferred to him within fourteen days. The wife is opposed to this course.
On the husband’s proposal this would enable the wife to receive about $30,000 as an advance of her property entitlement pending sale of the property. He purports in his proposed order to restrict the wife’s solicitor’s access to any part of that sum. No submissions were made in relation to the latter proposal as it was only contained in the proposed order submitted after the trial. On my view, whether or not the wife is able to access the proposed $30,000 is a matter between herself and her solicitor.
I note in passing that the wife’s solicitor submitted a rather extraordinary costs disclosure notice estimating her fees to be in the vicinity of $220,000 to $245,000 plus GST and plus counsel’s fees of $29,600. This case could not be described as complex. Indeed I do not know why it is in this Court. I can only assume that the wife has been provided with a notice as to her rights to challenge an invoice should one be received as estimated by her solicitor.
The wife also proposes that the husband’s interest in the Suburb C property be transferred from his sole name into their joint names so that each holds a half interest as tenants in common and that pending that transfer he be restrained from dealing with it. I understand these orders are sought so as to protect the wife’s interest in the property and to ensure that she has input into the sale procedure.
The husband opposes the wife’s proposals to transfer of the Suburb C property to joint names and opposes the injunction. He submits that as an officer of the court he is acutely aware of his responsibilities not to deal with the land in a way that is contrary to any final property order or in a way that may prejudice the wife’s interests. Both parties agree that the existing caveat registered on the land at the behest of the wife should be removed as it may discourage a potential purchaser.
The husband seeks to be relieved of an undertaking he gave to the this Honourable Court on 7 October 2016 not to sell, dispose, encumber or any way deal with his interest in the Suburb C property without the written consent of the wife or order of the court and to keep the wife informed of any negotiations or discussions with third parties regarding any sale or disposal including any verbal or telephone conversations. There is no suggestion that the husband has failed to comply with that undertaking.
The wife also seeks the immediate sale of the former matrimonial home.
The husband opposes a sale of the former matrimonial home given that his practice office is located there and if he were required to relocate to other office premises this would eat into his already modest income from his professional activities. It might be that the former matrimonial home would sell earlier than the Suburb C property but I cannot assume that to be the case.
Conclusion about form of order
I am not persuaded that there is sufficient certainty about the benefits to the parties in proceeding down the path of borrowing money to obtain a development approval. It will cost a considerable sum and they will have to pay interest on any sum borrowed. The prospect of a more profitable sale is speculative. The parties have received an expression of interest from a prospective purchaser at the valuation attributed to the property by Mr N. The wife proposes that the parties explore that possibility before listing the property for sale. That seems a sensible course. In the event the property does not sell by private treaty I propose to order a sale by auction at the time proposed by the wife.
I am not persuaded that it is necessary to transfer any portion of the Suburb C property to the wife. It is to be sold. I consider the continuation of the existing undertaking provided by the husband on 7 October 2016 to be a sufficient protection of the wife’s interest. The husband is an officer of the court and I accept his assurances that he will act in accordance with any orders of the Court and there is no suggestion he has acted contrary to his undertaking.
I am not persuaded that the former matrimonial home should be sold to meet in part the wife’s entitlement for a property settlement. I have no evidence that it will mean an earlier provision of money for her and it will significantly prejudice the husband if he has to rent alternate premises from which to conduct his practice.
Accordingly, I make the order as set out above.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carew delivered on 7 July 2017.
Associate:
Date: 7 July 2017
Key Legal Topics
Areas of Law
-
Civil Procedure
-
Equity & Trusts
Legal Concepts
-
Constructive Trust
-
Fiduciary Duty
-
Injunction
-
Remedies
0
2
0