HUTCHENS & LINDGREN

[2019] FCCA 1790

FEDERAL CIRCUIT COURT OF AUSTRALIA

HUTCHENS & LINDGREN [2019] FCCA 1790

Catchwords:
FAMILY LAW – Property settlement – de facto relationship – dispute about contributions initially and during relationship – dispute about value of respondent’s businesses – respondent’s lack of disclosure.

Legislation:

Family Law Act 1975 (Cth), ss.79, 90SF, 90SM

Cases cited:

Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116

Stanford v Stanford (2012) 247 CLR 108; (2012) 293 ALR 70; (2012) 47 Fam LR 481; [2012] HCA 52

Applicant: MS HUTCHENS

Respondent: MR LINDGREN

File Number: MLC 12327 of 2017

Judgment of: Judge Mercuri

Hearing date: 6 December 2018

Date of Last Submission: 6 December 2018

Delivered at: Melbourne

Delivered on: 2 July 2019

REPRESENTATION

Counsel for the applicant: Mr Puckey

Solicitors for the applicant: Morrison & Sawers

Counsel for the respondent: Mr Atkinson

Solicitors for the respondent: O’Farrell Robertson McMahon

ORDERS

1. Within 60 days of the date of these orders (“the date”), the respondent pay to the applicant the sum of $56,740 (“the payment”).

2. In the event that the whole of the payment has not been made by the date, the real property situate at Street A, Town B, more particularly described in Folio Identifier … (“the Street A, Town B property”) be forthwith sold altogether out of court (“the sale”) and upon completion of the sale, the proceeds of the sale be applied:

   (a)firstly, to pay all costs, commissions and expenses of the sale;

   (b)secondly, to discharge the mortgage and any other encumbrance affecting the Street A, Town B property;

   (c)thirdly, so much of the payment as is then outstanding together with interest thereon as prescribed by the Family Law Rules 2001 adjusted monthly from the date to the applicant; and

   (d)fourthly, the balance then remaining to the respondent.

3. Pending the payment or completion of the sale:

   (a)the respondent have the sole right to occupy the Street A, Town B property and during such right of occupation, the respondent pay all instalments pursuant to the mortgage and all rates, taxes and like apportionable outgoings of the Street A, Town B property as they fall due;

   (b)the parties hold their respective interests in the Street A, Town B property upon trust pursuant to these orders; and

   (c)neither party may encumber the Street A, Town B property without the consent in writing of the other party.

4. Liberty is reserved to either party to apply with respect to the terms and conditions of and execution of the sale.

5. The respondent otherwise retain, to the exclusion of the applicant, all other items of property (both real and personal and including choses-in-action and financial resources) in his name, possession and/or control, including but not limited to:

   (a)his interest in ‘Business C’ and ‘Business D’;

   (b)his Motor Vehicle H;

   (c)his caravan;

   (d)his motorcycle;

   (e)any proceeds of sale from Street A, Town B; 

   (f)the respondent’s bike and boat;

   (g)his bank accounts and savings;

   (h)his superannuation entitlements with Super Fund K; and

   (i)his personal belongings and effects.

6. The respondent be solely liable for and indemnify the applicant against any liability in his name or encumbering any item of property which he is to retain pursuant to these orders, including but not limited to:

   (a)the mortgage secured over the Street A, Town B property;

   (b)any liability associated with his businesses, ‘Business C’ and ‘Business D’; and

   (c)his credit card debts.

7. The applicant otherwise retain, to the exclusion of the respondent, all other items of property (both real and personal and including choses-in-action and financial resources) in her name, possession and/or control, including but not limited to:

   (a)the property at Street E, Town F, (“the Street E, Town F property”);

   (b)her bank accounts and savings;

   (c)her superannuation entitlements with Super Fund L; and

   (d)her personal belongings and effects.

8. The applicant be solely liable for and indemnify the respondent against any liability in her name or encumbering any item of property which she is to retain pursuant to these orders, including but not limited to:

   (a)the mortgage secured over the Street E, Town F property; and

   (b)her credit card debts.

9. 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 and financial resources) owned by or in the possession of such party as at the date of these orders (the furniture, personal possessions and like chattels in the Street E, Town F property being deemed to be in the applicant’s possession);

   (b)money standing to the credit of the parties in any joint bank account is to be divided equally between the parties;

   (c)each party hereby foregoes any claim they may have to any superannuation benefits belonging to or earned by the other;

   (d)insurance policies remain the sole property of the owner named thereon; and

   (e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

AND THE COURT NOTES THAT:

(A)Pursuant to section 81 of the Family Law Act 1975 (Cth) the parties intend that these orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.

(B)Section 121 of the Family Law Act 1975 (Cth) provides that it is an offence punishable by imprisonment for up to one year to publish or disseminate to the public any account of family law proceedings which identifies the parties, witnesses or other people concerned with the proceedings, unless specifically authorised by the court.

IT IS NOTED that publication of this judgment under the pseudonym Hutchens & Lindgren is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 12327 of 2017

MS HUTCHENS

Applicant

And

MR LINDGREN

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is an application under section 90SM of the Family Law Act 1975 (“the Act”) for a de facto property settlement.

Background

1. The essential facts are not significantly in dispute.

2. The parties commenced cohabitation on … 2009 when the respondent moved in to the applicant’s property at Street E, Town F, (“Street E, Town F property”).

3. There are no children of the relationship.  The applicant has a son from a previous relationship who lived with the parties from the age of about 11 years in 2009 until separation on 10 January 2017. 

4. The respondent also had a child from a previous relationship.  His child initially came to stay with him and the applicant each alternate weekend as well as part of the school holidays.  The applicant received child support for her son from his father.  The respondent paid child support to the mother of his child.

5. The applicant paid all of the mortgage repayments in respect of the Street E, Town F property both during the relationship and post separation.  The parties contributed equally to a joint account each week which was applied towards living expenses. 

6. During the relationship, the respondent established the business, Business C (“business”) initially working out of the applicant’s home. There is some dispute as to the assistance provided by the applicant in the set up and running of this business which will be discussed further below.

7. In any event, it is also not in dispute that in 2014, the respondent purchased a property at Street A, Town B, with a business partner at which he commenced operating the Business C.  He and his business partner also started a Business D on those same premises.

8. During the relationship the respondent sold another piece of land at Street A, Town B, and after costs and expenses, received $24,000 net.[1]  The respondent says that he used this money to meet various expenses.  This is discussed further below. 

   [1] The applicant disputes this figure.

9. In terms of their current situation, the applicant was, at the time of trial, working a variety of jobs.  In her amended financial statement sworn 8 November 2018, she deposes to receiving an average weekly income of $738 and having total expenses of $1,198 per week. 

10. The respondent for his part, did not expressly identify his average weekly income in the financial statement he prepared and swore on 24 January 2018, but simply attached a profit and loss statement. 

11. The applicant has also given evidence that she suffers from poor health, although it is clear that notwithstanding her various health conditions she is able to generate some, albeit modest income.

12. Both parties are of a similar age. 

Complaints of non-disclosure

1. The applicant complains about the respondent’s failure to make proper disclosure in relation to a range of matters, including the sale of various bikes, vehicles and the like as well as the sale of Street A, Town B, and how those sale proceeds were applied.  The applicant also complains about the respondent’s lack of disclosure in relation to the Business C business. 

2. Counsel for the applicant noted that when this matter first came before the court for final hearing some months before December 2018, the respondent sought and was granted an adjournment to allow him to obtain a valuation of the applicant’s home on the basis that he disputed the valuation produced by the jointly appointed valuer. 

3. The respondent ultimately did not file any further valuation, nor did he file an updated financial statement or any further affidavit material.  Moreover, until the respondent filed his outline of case in these proceedings, his position was that the parties ought to keep what they each brought into the relationship and split what was accumulated during the relationship, on a 50/50 basis.  His outline of case altered this such that at trial, the respondent’s position was that no order ought to be made adjusting the property interests of the parties and that they should each retain what they had in their respective names. 

The legislation

1. Section 90SM of the Act gives the court power to alter the interests of the parties to a de facto relationship in the property of those parties following the breakdown of their relationship. Section 90SM(3) of the Act provides that:

   The court must 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.

2. It is well settled since Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) that the proper approach to an application under section 79 of the Act, which similarly applies to section 90SM in relation to parties to a de facto relationship, is as follows:

   It will be recalled that section 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 this section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under section 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.[2]

   [2] Stanford v Stanford (2012) 247 CLR 108 at [35].

3. The court went on to say:

   The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to a marriage and whatever may have been their stated or unstated assumptions about property interests during the continuance of marriage.

   In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. … What order, if any, should then be made is determined by applying s 79(4) (emphases added) (footnotes omitted).[3]

   [3] Stanford v Stanford (2012) 247 CLR 108 at [41]-[42].

4. In this case, the parties cohabited for approximately eight years and have now separated. At the commencement of the relationship, the applicant had a home which she then shared with the respondent from the commencement of cohabitation.  That home, although remaining in the applicant’s sole name, provided the respondent with a location from which he commenced operating a business.  After some years, the respondent purchased another property, which he and his business partner then developed and from which he commenced operating two businesses.  The respondent continued living in the applicant’s home until separation. In all of these circumstances, the applicant seeks orders altering their respective property interests. The respondent says that no orders ought to be made in this case. 

5. Having regard to the principles in Stanford, I am satisfied that in all of the circumstances, it is just and equitable to make orders adjusting property matters between them on a final basis. 

6. Having come to this view, in considering what orders ought to be made, the court must have regard to the following issues:

   a)what are the assets and liabilities of the parties;

   b)what assessment is to be made of the parties’ respective contributions, both financial and non-financial;

   c)the effect of any proposed order on the income earning capacity of either party;

   d)the section 90SF(3) factors, to the extent that they are relevant; and

   e)and ultimately, having regard to all of these factors, what, if any, order is just and equitable.

Assets and liabilities

1. At trial, counsel for the applicant handed up an aide memoir setting out the assets and liabilities as at the date of trial.  Set out below are the values attributed to those assets by the respondent and the applicant respectively.

Asset / Liability	Ownership	Respondent’s value	Applicant’s value
Street E, Town F property	Applicant	$285,000	$285,000
Street E, Town F mortgage	Applicant	($115,000)	($115,000)
Street A, Town B property[4]	Respondent	$405,000	$405,000
Street A, Town B mortgage	Respondent	($240,000)	($240,000)
Motor Vehicle H	Respondent	$6,400	$10,000
Caravan	Respondent	$1,500	$3,000
Motorcycle	Respondent	$6,000	$30,000
Street A, Town B proceeds of sale	Respondent	$24,000	$28,000
Proceeds of sale of boat and bike	Respondent	$5,000	$15,000
Respondent’s various business interests	Respondent	NK	NK
Total		$377,900	$421,000

[4] This figure represents the respondent’s share of the ownership of the Street A, Town B property.

Superannuation

1. It is not in dispute that the parties’ respective superannuation entitlements at trial are as follows:

Applicant (Super Fund L)	$121,120
Respondent (Super Fund K)	$29,811

Motor Vehicle H

1. In her affidavit filed 27 November 2017, the applicant deposes that the respondent owned a Motor Vehicle H which she estimates to be worth $10,000.[5]  She does not otherwise provide any evidence as to how she arrives at this value for the vehicle.

   [5] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 31.

2. The respondent attests to the fact that the current Redbook valuation of his Motor Vehicle H is $6,400.

3. In my view, the applicant has not established that the Motor Vehicle H is worth more than the Redbook valuation as deposed to by the respondent.  Although the respondent’s evidence is less than satisfactory, the best evidence as to the value of the Motor Vehicle H is the respondent’s affidavit which attests to the Redbook valuation of $6,400.

Caravan

1. The applicant deposes an estimate of $3,000 for the respondent’s caravan although again, she provides no evidence as to the basis for this valuation.[6]

   [6] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 31.

2. The respondent states that the caravan is only partially restored, has little or no value and at most is worth $1,500.[7]

   [7] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(q)(iv).

3. There is insufficient evidence on which to attribute anything more than $1,500 to the caravan as conceded by the respondent.

Motorcycle

1. The applicant also asserts that the respondent owns a motorcycle which he has applied some $10,000 during the relationship to restore.  The applicant asserts that this motorcycle is worth some $30,000 although again no evidence was provided to support this valuation.[8]

   [8] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 25.

2. The respondent conceded that he purchased the motorcycle in 2009 second hand for $10,200 and has spent time and money to maintain its condition as a hobby.[9] However, he deposed that the Redbook valuation for the motorcycle is $5,700.  Again, this valuation was not tendered during the trial.

   [9] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(n).

3. The wife has not established that the motorcycle is worth more than the Redbook valuation as deposed to by the respondent.  Although the evidence presented to the court as to the motorcycle’s value is less than satisfactory, the best evidence as to its value is the respondent’s affidavit which attests to the Redbook valuation of $5,700.

Boat and bike sold by the respondent

1. Although the respondent deposes that he sold his boat post separation for $3,100, the applicant deposes that its market value was $7,000.[10]

   [10] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 33.

2. The respondent says that he purchased the said boat some six years prior for $7,000, that it had a mechanical failure to the engine and therefore the price received was $3,100.[11]

   [11] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(q)(vi).

3. In relation to a bike sold by the respondent for $2,200 post separation, the applicant similarly asserts that in her view, it was worth almost $8,000.[12]

   [12] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 34.

4. The respondent deposes that the bike was in average repair when sold and that the sale price represented fair market value.[13]

   [13] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(q)(vii).

5. There is insufficient evidence before the court to attribute a value other than that deposed to by the respondent as the relevant sale price for the boat and bike.  I therefore accept the sale price for the boat of $3,100 and the bike of $2,200. 

Street A, Town B proceeds of sale

1. The applicant gave evidence that she had been informed by the respondent’s solicitors that he sold the block of land at Street A, Town B, for $85,000, although she was not provided with a settlement statement and was therefore unable to confirm the mortgage value at the time of sale.[14]  The applicant included the proceeds of that sale in her table of assets and liabilities, initially at $40,000.  At the time of trial, the applicant asserted that the proceeds of this sale were $28,000. This appears to have been conceded in cross examination.[15]

   [14] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 35.

   [15] Transcript page 37 at lines 32 to 33; page 49 at lines 12 to 13.

2. In relation to Street A, Town B, the respondent says that he sold this block of land privately and therefore saved the costs of agent’s commission.  Moreover, he says he sold it for $85,000 and after selling costs, paying out the mortgage of approximately $45,000 and paying out a business credit card of $16,000, he received approximately $24,000 net which he used to pay ‘some trade creditors from my business’.[16] 

   [16] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(q)(ix).

1. No documentary evidence has been produced by the respondent as to the nature of those debts or indeed whether the proceeds of sale were used for that purpose either in whole or in part.

2. There is insufficient evidence on which to attribute a value other than that identified by the respondent to the proceeds of sale of the Street A, Town B property.  For the purposes of this decision, I find therefore that the respondent cleared $24,000 from the proceeds of the sale of the Street A, Town B property and that such sum ought to be included in the list of assets and liabilities for the purpose of determining what, if any, order ought to be made adjusting the property interests of the parties.

Respondent’s business interests

1. It is also common ground that shortly after cohabitation commenced, the respondent started the Business C.  The respondent gave evidence that he is self-employed and operates the Business C solely.  He also deposed to operate a business known as ‘Business D’ in equal partnership with Mr G (“the Business D business”). 

2. The respondent has also given evidence that the income from the Business D business is about half of the amount necessary to cover the mortgage repayments for the funds borrowed to build the sheds.  He deposed:

   Since completion, the business has operated at a loss and there are still approximately 7 sheds that have been empty for the whole time we have operated the business.[17]

   [17] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(j).

3. In his financial statement filed on 25 January 2018, the respondent does not attribute any value to either the Business C or the Business D.  Rather he states that the value of these businesses is ‘net liability’.  I understand the respondent’s case to be that the businesses have a negative value.

4. For her part, the applicant asserts that the value of the Business C is $110,000 and that the respondent’s 50% share of the Business D is $50,000.[18]

   [18] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 31.

5. As stated above, although the Street A, Town B property from which the Business C and the Business D operated have been valued, there is no valuation produced by either party for the businesses themselves.

6. There is insufficient evidence before the court to attribute any value to either the Business C or the Business D.

Asset pool

1. On the basis of these findings, I find that the asset pool consists of the following:

Asset	Ownership	Value
Street E, Town F property	Applicant	$285,000
Street A, Town B property[19]	Respondent	$405,000
Motor Vehicle H	Respondent	$6,400
Caravan	Respondent	$1,500
Motorcycle	Respondent	$5,700
Street A, Town B proceeds of sale	Respondent	$24,000
Proceeds of sale of boat and bike	Respondent	$5,300
Various business interests	Respondent	Nil
Total assets		$732,900

[19] This figure constitutes the respondent’s share of the Street A, Town B property.

Liability	Ownership	Value
Street E, Town F mortgage	Applicant	($115,000)
Street A, Town B mortgage	Respondent	($240,000)
Total liabilities		($355,000)
Total non-superannuation pool		$377,900

Superannuation	Ownership	Value
Applicant’s superannuation	Applicant	$121,120
Respondent’s superannuation	Respondent	$29,811
Total superannuation		$150,931

Contributions

1. At the commencement of the relationship, the applicant owned the Street E, Town F property which was valued at $220,000 and subject to a mortgage of $90,000 at the time. 

2. The applicant also had a vehicle and superannuation of about $70,000 at the commencement of the relationship.

3. There is some dispute about what assets the respondent owned at the commencement of the relationship. The respondent says he owned a motorbike valued at $10,000, a Motor Vehicle H which he valued at $25,000 and interest in some property with his former wife.  A short time after cohabitation commenced, he received a payment of $16,700 by way of property settlement from his former wife. 

4. The applicant takes issue with the respondent’s valuation of his motor vehicle at the commencement of cohabitation and says that it was worth $16,000. 

5. Similarly, the applicant asserts that the respondent also had credit card debts of approximately $25,000 at the commencement of cohabitation[20] although again, no evidence was adduced to support this proposition.  The respondent denies having any such credit card debt.[21] 

   [20] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 11.

   [21] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(c).

6. On the basis of the evidence before me, I find that the applicant’s initial contributions were significantly greater than those of the respondent.  Moreover, the fact that the respondent not only had somewhere to live but also the use of the applicant’s home from which to launch the Business C, her initial contribution requires further recognition. 

7. During the relationship, the applicant met the mortgage expenses and the parties otherwise contributed equally to the other costs and expenses of daily life.  It is not in dispute that there was a period during which the applicant was not working in or around 2015 and during that time, she did not contribute towards mortgage repayments but rather relied upon the drawdown facility to meet the mortgage repayments until such time as it had been fully utilised. 

8. As stated, shortly after cohabitation commenced, the respondent started the Business C.  There is a dispute about the level of assistance provided by the applicant to the respondent in the establishment and running of that business.  The respondent states that he used the proceeds of sale of his Motor Vehicle H ($18,000) to set up the Business C.[22]  He further deposed that if the applicant did provide assistance, it had ‘incidental or little or no value’.[23] 

   [22] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(f).

   [23] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(f).

9. Conversely, the applicant states that she ‘supported the respondent financially whilst the business was getting started’ and assisted by setting up MYOB, the website and domain names.  She further deposed to registering the business name and the ABN and completing the business’ bookwork.[24]  The applicant also states that initially, the business was conducted from the Street E, Town F property.[25]

   [24] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 15.

   [25] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 15.

10. Having regard to the totality of the evidence before me, I am satisfied that the applicant did contribute to the establishment of the Business C in the following ways:

    a)the Business C was initially conducted from the Street E, Town F property; and

    b)the applicant provided some assistance in the setup of the website for the Business C.

11. It is not in dispute that the parties renovated the Street E, Town F property in about 2011.  It is also agreed that the applicant refinanced her mortgage by borrowing a further $60,000 which was applied to the renovations over the Street E, Town F property.  The parties also agreed that the respondent conducted some of the renovation works although there is a dispute between them as to the extent of his contribution.  The respondent gave evidence that he did most of the ‘hands on’ work and also supplied a great deal of the building materials.[26]  He says that in addition to his personal labour, the respondent also contributed about $25,000 in materials.[27]  I note that the respondent failed to produce any documentary evidence such as invoices or bank statements to support this assertion. 

    [26] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(g).

    [27] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(g).

12. In circumstances where the respondent has had significant time to produce any evidence in support of the submission that he paid some $25,000 towards costs of materials and has failed to do so, he has failed to establish on the balance of probabilities that he has contributed in this manner. 

13. The respondent, together with his friend and business partner, Mr G, purchased the property at Street A, Town B, (“Street A, Town B property”) in about 2014.  The applicant deposes that the Street A, Town B property is owned by them as tenants in common in equal shares.[28] 

    [28] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 18.

14. The respondent does not challenge this assertion. Rather, interestingly, in his affidavit of 25 January 2018, the respondent says the following in response:

    In respect of paragraph 18 thereof I make no comment.[29]

    [29] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(i).

15. The respondent then goes on:

    …the property at Street A, Town B, consists of one title. 2 sheds have been erected on the property.  I utilise one shed exclusively for my “Business C ‘Business C” business and the other shed is used by Mr G exclusively.  Mr G and I completed the building of 24 sheds on the property in about … 2016.  Mr G and I conduct the business known as ‘Business D” as an equal partnership.  No income was generated from the Business D prior to their completion. The mortgage raised to build the sheds costs approximately $4,400 per month to service and the income currently generated from the sheds is less than half of this amount.  Since completion, the business has operated at a loss and there are still approximately 7 sheds that have been empty for the whole time we have operated this business.[30]

    [30] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(j).

16. Having regard to the totality of the evidence, I find that each of the parties contributed equally during the relationship both financially and in other ways.

Effect of any proposed orders on the parties’ income earning capacity

1. The applicant gave evidence that she currently has three part time positions and earns just over $700 per week.  The proposed orders would not impact on her capacity to continue to earn an income.

2. For his part, the respondent’s evidence is that:

   a)not only does he conduct both the Business C and the Business D from the Street A, Town B property, but post separation he has been living at the Street A, Town B property in his caravan;

   b)the office space at the Business C has been modified to allow the respondent to continue to live there;

   c)he does not have the capacity to borrow any further sums and, if he is required to make a payment to the applicant, he would be forced to sell the Street A, Town B property to fund such a payment. 

3. It was argued that the effect of the orders proposed by the applicant would result in the respondent having to sell the Street A, Town B property and therefore have nowhere to live and nowhere from which to conduct  his business operations.  The respondent asserts that he would not be able to raise any further funds to satisfy an order that he make a payment to the applicant in the terms sought by the applicant or indeed in any other sum.

4. The respondent has not produced any correspondence from his bank confirming that he is currently at his credit limit.  The respondent also failed to adduce any evidence demonstrating attempts made to obtain further finance and/or any responses received to such requests. 

5. The applicant, for her part, is critical of the continued non-disclosure by the respondent and urges the court to conclude, in the face of that non-disclosure, that there may well be additional assets at the respondent’s disposal. 

6. I note that the respondent’s evidence is that the Business D is not currently producing a profit.  The respondent concedes that prior to purchasing the Street A, Town B property, he was able to and, in fact did, conduct the Business C from the applicant’s home.  There is no evidence before the court which could properly verify that if the respondent were required to sell the Street A, Town B property, he would not be able to continue to operate the Business C from alternative premises. 

Section 90SF(3) factors

1. Neither party sought to rely upon section 90SF(3) factors to any great degree.

2. Having said that, the court is required to have regard to those factors to the extent that they are relevant. The matters to be taken into account under section 90SF(3) of the Act relevantly include:

   (a)the age and state of health of each of the parties to the de facto relationship …; and

   (b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and

   (c)…

   (d)commitments of each of the parties that are necessary to enable the party to support:

   (i)himself or herself; and

   (ii)…

   (e)…

   (f)…

   (g)a standard of living that in all the circumstances is reasonable; and

   (h)…

   (i)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and

   …

   (r)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and

   …

3. The parties are of a similar age.  The applicant has deposed to a history of back conditions but has continued to work and derive an income which allows her to remain living in her home and meet the costs of the mortgage and other living expenses. 

4. The respondent does not attest to any medical conditions.  I have already dealt with the parties’ respective financial positions. I am satisfied that they each possess the mental and physical capacity to remain engaged in gainful employment.

5. The applicant currently lives in her own home which has recently been renovated and, as stated, she has been able to continue to meet her mortgage expenses and living costs.

6. The respondent currently lives on the premises from which he conducts his business.  There is some dispute as to the state of those living arrangements, but I am satisfied on the basis of the totality of the evidence before me that his current living quarters are adequate.  The respondent’s evidence is that at the time of separation, he had incurred trade debts in the sum of approximately $40,000.  He also says that he used the proceeds of the sale of Street A, Town B, ($24,000) to pay off some of his trade creditors.[31]  He also says that he borrowed a further $15,000 from his mother and $5,000 from a Ms J, as well as incurring an additional $7,700 on his credit cards to meet his legal costs and living expenses.[32]  He has not provided any clear evidence about what income he is generating from his business ventures. 

   [31] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(q).

   [32] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(q)(xviii).

7. To say that the respondent’s evidence about his financial affairs is unsatisfactory is an understatement.  This is notwithstanding the fact that these proceedings were adjourned in June 2018 to allow him to file further material. 

8. In the course of cross examination, counsel for the applicant put to the respondent his application for a business loan lodged with the ANZ bank.[33]  This contained information which was said to reflect the financial position of the respondent and his business partner as at 14 March 2017. In that document, not only did the respondent ascribe a significantly higher value to some of his assets, but he also indicated that he had personal equity in a private business to the tune of $60,000.  Similarly, his partner indicated that he had ‘other assets’ of $100,000 namely, “equity in business”.[34] 

   [33] Exhibit B.

   [34] Exhibit B.

9. When asked about these matters in the course of cross examination, the respondent responded, “that was probably me trying to achieve some funds that we were desperate to borrow, so I may have overstated those amounts.”[35]

   [35] Transcript page 36 at lines 42 to 44.

10. It is clear that the respondent has provided inconsistent information about his financial position to the bank as compared to the information provided to this court. 

11. The applicant’s proposed orders would result in the applicant retaining her home and receiving a modest payment from the respondent.  For his part, the respondent would have the opportunity to seek to obtain finance in order to make a modest payment to the applicant and, if he is able to do that, he could then retain the Street A, Town B property and continue to undertake his business ventures from there.  The respondent has not led any evidence as to the costs of rental accommodation and his capacity to meet the costs of such accommodation if he were to move out of the business premises.  

12. If the respondent were required to dispose of his share in the Street A, Town B property, he would still have available funds from which he could either purchase a home or rent another property. 

13. One of the factors to which the court is to have regard is the impact of any orders on any creditors and their capacity to recover their debts.  In this case, it is not in dispute that the Street A, Town B property is jointly owned by the respondent and his business partner Mr G.  It was submitted by counsel for the applicant that Mr G was advised of the proceedings and the orders being sought which might impact on his interest in the Street A, Town B property.[36]  Mr G did not seek leave to be joined to the proceedings and has made no submissions in that regard.

    [36] Transcript page 58 at lines 30 to 41.

14. To the extent that the respondent indicates that he has trade creditors, he has not led any evidence as to the debts he says that he has, the amount of those debts and his capacity to repay them.  There is no basis therefore on which the court could conclude that any proposed order would limit his ability to meet those debts as and when they fall due.

Any other factor

1. At the commencement of the relationship, the applicant had $77,000 in superannuation.  There is no evidence before the court that the applicant had any superannuation.  At trial, the applicant’s superannuation had increased to $121,120, an increase of just over $44,000.  The respondent’s superannuation had reached just under $30,000.  That is, the superannuation accrued by the parties during the relationship was similar. 

2. In addition, the applicant has continued post-separation, to meet the mortgage repayments and has further reduced the mortgage by some $10,000, further contributing to the asset pool available for adjustment between the parties.[37]

   [37] Transcript page 47 at lines 32 to 40.

3. Each of the parties alleges that they have borrowed money from family and friends which they will need to repay and seek to have these amounts included in the pool.  In the case of the applicant, she alleges that her parents purchased a vehicle for her in … 2017 for $10,000 and that they have also lent her a further $2,500 to repay her credit card debt.[38]  She says that she will therefore need to repay them $12,500.  She also deposed that her brother gifted her $2,000 to assist with her mortgage repayments although this amount does not need to be repaid.[39]

   [38] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 26.

   [39] Affidavit of the applicant sworn 24 and filed 27 November 2017 at paragraph 27.

4. The respondent states that he has borrowed $15,000 from his mother and $5,000 from Ms J to assist with meeting his ‘living expenses and legal costs in respect of this matter’ post separation.[40]

   [40] Affidavit of the respondent sworn 24 and filed 25 January 2018 at paragraph 4(o).

5. Neither party has filed evidence from the alleged debtors particularising these ‘loans’.  There is no evidence before the court as to the basis on which any money was provided and indeed that it is required to be repaid.  On the basis of the evidence, such as it is, neither party has established on the balance of probabilities that they have been ‘loaned’ the sums claimed, nor indeed that any such amount is required to be repaid. I have therefore not included these amounts in the asset pool for division between the parties.

What order is just and equitable?

1. Having regard to all of these factors, I do not accept the respondent’s submission that this is a case which does not warrant the making of any orders. This is particularly so having regard to the significant contribution made by the applicant at the commencement of the relationship, not only by providing the parties with a home in which to live but also by providing the respondent with premises from which to conduct his business.

2. Whilst I accept that the parties’ contributions during the relationship were roughly equal, the applicant’s initial and significant contribution must be reflected in any ultimate orders adjusting the parties’ property interests.

3. I have also had regard to the lack of disclosure by the respondent which has made it more difficult to properly assess the asset pool.  If the information provided by the respondent to the bank in Exhibit B is correct, there would appear to be additional property available for distribution between the parties.

4. Whilst it is the case that an order for the respondent to make a payment to the applicant might result in him having to dispose of some or all of his interest in the Street A, Town B property, he has had the benefit of being able to conduct his business from the applicant’s home for a number of years.  Even if he were required to sell that property, he would retain some of the equity which could be used to re-establish himself in alternate accommodation.

5. Whilst I am satisfied that some adjustment ought to be made to the parties’ property interests, I do not accept the applicant’s proposal that an adjustment ought to be made in her favour such that she receive 70% of the asset pool and the respondent receive 30%. 

6. Rather, in all of the circumstances, and having regard to the fact that I do not propose making any adjustment to the parties’ superannuation interests, I find that it is just and equitable that an order be made that there be an adjustment in the applicant’s favour such that she receive 60% and the respondent receive 40% of the non-superannuation asset pool and that each party retain their own superannuation entitlements. 

7. I therefore make the orders set out at the beginning of these written reasons for judgment.

I certify that the preceding ninety-seven (97) paragraphs are a true copy of the reasons for judgment of Judge Mercuri

Date:     2 July 2019