Jabour and Jabour
[2018] FCCA 928
•25 May 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| JABOUR & JABOUR | [2018] FCCA 928 |
| Catchwords: FAMILY LAW – Property – marital relationship – long marriage – increase in property value due to rezoning – who should benefit from windfall appreciation in property value – whether significance of husband’s contribution can be eroded over a long marriage – asset by asset or global approach. |
| Legislation: Family Law Act 1975, ss.72(1), 75(2), 79(2), 79(4) |
| Cases cited: Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116 Norbis v Norbis (1986) 161 CLR 513 Wallis v Manning (2017) FLC 93-759; [2017] FamCAFC 14 Zappacosta v Zappacosta (1976) FLC 90-089; (1976) 2 FamLR 11,214; (1976) 26 FLR 412 |
| Applicant: | MS JABOUR |
| Respondent: | MR JABOUR |
| File Number: | MLC 3535 of 2014 |
| Judgment of: | Judge Mercuri |
| Hearing dates: | 5 & 6 February 2018 |
| Date of Last Submission: | 6 February 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 25 May 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr D Matta |
| Solicitors for the Applicant: | Cahill & Rowe Family Law |
| Counsel for the Respondent: | Dr R Ingleby |
| Solicitors for the Respondent: | Collins Law |
ORDERS
That within 21 days of this order, the sum of $1,000,000, being the first tranche of the proceeds of sale of Property A (“the Property A property”) held on trust on behalf of the parties by HWL Ebsworth Lawyers, be distributed as follows:
(a)the sum of $284,625 be paid to Mr R in respect of invoice issued by Company Omitted;
(b)the sum of $1,434.31 be paid to Coulter Roache Lawyers in respect of invoice;
(c)the sum of $4,482.63 be paid to HWL Ebsworth Lawyers in respect of invoice;
(d)the sum of $2,218.48 be paid to HWL Ebsworth Lawyers in respect of invoice;
(e)the sum of $15,000 be paid to the husband by way of reimbursement for outgoings paid in respect of the Property A property; and
(f)the balance then remaining, save for $30,000 to be retained and held on trust to meet any ongoing expenses in relation to the Property A property, to be paid as follows:
(i)the sum of $331,119.79 to the husband;
(ii)the sum of $281,119.79 to the wife; and
(iii)the sum of $50,000 to be paid into the trust account of Cahill & Rowe Family Law on account of the wife’s legal professional fees and disbursements.
That upon receipt, the second tranche of the sale price of the Property A property ($1,000,000) be distributed as follows:
(a)$30,000 to be held on trust by HWL Ebsworth Lawyers to meet any ongoing expenses in relation to the Property A property; and
(b)the balance then remaining to be paid as follows:
(i)the sum of $485,000 to the husband; and
(ii)the sum of $485,000 to the wife.
That upon receipt, the third tranche of the sale price of the Property A property ($500,000) be distributed as follows:
(a)$30,000 to be held on trust by HWL Ebsworth Lawyers to meet any ongoing expenses in relation to the Property A property; and
(b)the balance then remaining to be paid as follows:
(i)the sum of $235,000 to the husband; and
(ii)the sum of $235,000 to the wife.
That upon receipt, the fourth tranche of the sale price of the Property A property ($500,000) be distributed as follows:
(a)$30,000 to be held on trust by HWL Ebsworth Lawyers to meet any ongoing expenses in relation to the Property A property; and
(b)the balance then remaining to be paid as follows:
(i)the sum of $235,000 to the husband; and
(ii)the sum of $235,000 to the wife.
That upon receipt, the fifth and final tranche of the sale price of the Property A property ($7,350,000) be distributed as follows:
(a)$30,000 to be held on trust by HWL Ebsworth Lawyers to meet any ongoing expenses in relation to the Property A property;
(b)the sum of $1,191,450 to discharge the husband’s income tax liability arising from the sale of the Property A property; and
(c)thereafter, the balance to be distributed to the parties as follows:
(i)the sum of $4,617,085.55 to the husband; and
(ii)the sum of $1,511,464.45 to the wife.
In the event that there are any additional outstanding costs associated with the sale of the Property A property not otherwise addressed in these orders, the parties will contribute to those costs in the proportions of 66% by the husband and 34% by the wife.
As soon as reasonably practicable following receipt of the fifth and final tranche of the sale of the Property A property, the parties do all acts and things necessary and sign all documents as may be required to have any moneys remaining in the trust account of HWL Ebsworth as a result of orders (1)(f), (2)(a), (3)(a), (4)(a) and (5)(a) which have not been expended to meet outstanding expenses in relation to the Property A property to be distributed to the parties in the proportions of 66% to the husband and 34% to the wife.
The husband otherwise retain, to the exclusion of the wife, all 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 bank accounts and savings;
(b)his personal belongings and effects;
(c)the Vehicle D motor vehicle; and
(d)the motorcycle.
The husband be solely liable for and indemnify the wife against any liabilities in his name or encumbering any item of property which he is to retain pursuant to these orders, including but not limited to:
(a)his Bank 1 Mastercard debt; and
(b)his outstanding income tax liability (save and except for the husband’s liability arising from the sale of the Property A property, payment of which has been provided for in order (5)(b)).
The wife otherwise retain, to the exclusion of the husband, all 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)her bank accounts and savings;
(b)her personal belongings and effects;
(c)the funds held on trust for her benefit in the trust account of Cahill & Rowe Family Law;
(d)the Vehicle E; and
(e)her superannuation contributions and entitlements with Super Fund Y.
The wife be solely liable for and indemnify the husband against any liabilities in her name or encumbering any item of property which she is to retain pursuant to these orders, including but not limited to her outstanding income tax liability.
Unless the wife has already done so and has provided evidence in writing to the husband’s solicitor that she has removed any and all caveats lodged by her or on her behalf on the Property A property, the wife to remove any caveat on the Property A property within 7 days.
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 superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders;
(b)monies standing to the credit of the parties in any joint bank account are to be divided equally and the account/s closed;
(c)insurance policies remain the sole property of the policy owner named thereon;
(d)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; and
(e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
With respect to the husband’s superannuation and for the purposes of these orders:
(a)the husband is the member spouse (membership number);
(b)the wife is the non-member spouse;
(c)the superannuation fund is (Super Fund X) (“the fund”); and
(d)Superannuation Board (Super Fund X) is the trustee of the fund (“the trustee”).
The trustee do all such acts and things and sign all such documents as may be necessary so that in accordance with the obligations set out under the Family Law (Superannuation) Regulations 2001, the trustee can calculate the entitlement of and make payment to the wife in accordance with these orders.
The wife is to be allocated out of the interest of the husband in the fund, the base amount of $166,298 (provided that such base amount shall not exceed the value of the interest determined under section 90MT(2) of the Family Law Act 1975 (Cth) (“the Act”)).
In accordance with paragraph 90MT(1)(a) of the Act, whenever a splittable payment becomes payable from the husband’s interest in the fund, the trustee shall pay to the wife the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using the base amount allocated above and that there be a corresponding reduction in the entitlement that the husband would have had in the fund but for these orders.
Paragraphs 15 to 17 herein bind the trustee of the fund and these orders take effect from the operative time being the beginning of the fourth business day after the date of service of a sealed copy of these orders on the trustee.
The trustee of the fund must comply with the obligations imposed upon the trustees of eligible superannuation plans under the Act and the Family Law (Superannuation) Regulations 2001.
If as a result of termination of his employment, the husband becomes entitled to a benefit prior to the Super Fund X making a payment under section 22F of the Superannuation Act, he shall provide to the Super Fund all such forms as shall be necessary to enable the trustee to determine the nature and quantum of the superannuation entitlement and any other related information it may reasonably require within seven (7) days of that entitlement arising.
Each party and the trustee of the fund have leave to apply in relation to the implementation of these orders insofar as they relate to superannuation.
Until the occurrence of any of:
(a)the establishment of a separate account in the name of the non-member spouse in the fund; or
(b)the payment or ‘rolling over’ into another superannuation fund of the payment split created by these orders; or
(c)the non-member spouse satisfies a condition of release and is paid the payment split which was created by these orders; or
(d)the non-member spouse executing a waiver of rights within the meaning of section 90MZA of the Act in relation to the payment split created by these orders;
the member spouse be and is hereby restrained by himself, his servants or agents from executing a death benefit nomination in favour of any person or doing any other act or thing which would render any part of her interest in the fund a ‘non-splittable payment’ within the meaning of regulation 12 or 13 of the Family Law (Superannuation) Regulations 2001.
IT IS NOTED that publication of this judgment under the pseudonym Jabour & Jabour is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 3535 of 2014
| MS JABOUR |
Applicant
And
| MR JABOUR |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for orders altering the property interests of the parties under section 79 of the Family Law Act 1975 (Cth) (“the Act”).
Documents relied upon by the parties
The wife relied upon the following documents:
a)initiating application filed 8 August 2017;
b)affidavit of Ms Jabour filed 8 August 2017;
c)financial statement filed 8 August 2017;
d)affidavit of Mr J filed 8 August 2017; and
e)affidavit of Ms K filed 24 August 2017.
The husband relied upon the following documents:
a)response to initiating application filed 21 August 2017;
b)affidavit of Mr Jabour filed 21 August 2017;
c)financial statement filed 21 August 2017;
d)affidavit of Mr B filed 21 August 2017; and
e)affidavit of Mr R filed 22 August 2017.
Assessment of credit
Both parties gave evidence and were subject to cross examination. I found both parties to be witnesses of truth. They gave their evidence in an open and forthright manner.
It was put on behalf of the husband that the wife was less than forthright in her affidavit material and her evidence before the court. I do not accept this submission.
Summary of evidence and findings
The husband was born on 1963. He is employed as a (occupation omitted) where he earns approximately $93,000 per annum gross.
The wife was born on 1964. She is employed as a (occupation omitted) where she earns approximately $42,000 per annum gross.
The facts in this matter are not significantly in dispute. The parties commenced cohabitation in 1988 and married on 1991. There are three adult children of the marriage, namely:
a)Mr C born 1993 and aged 24 years;
b)Mr A born 1995 and aged 23 years; and
c)Mr B born 1996 and aged 21 years.
Prior to cohabitation, the husband had a half interest in three parcels of land on the Property A, Victoria, two parcels of which were 30 acres each and one parcel of 44 acres (together referred to as “the original Property A property”). The husband’s share in the original Property A property was at all relevant times registered in his name.
As a result of the sale of each of the two 30 acre lots and the purchase of the other half share of the 44 acre lot, by 1999, the husband became the registered owner of 100% of the 44 acre lot at Property A (“the Property A property”). The history of the transactions which led to this is set out in more detail below.
It is also not disputed that the local council rezoned the area in which the Property A property was located into an urban growth zone, thereby permitting it to be used for residential purposes. As a result of this council decision, the value of the Property A property increased significantly.
The husband’s case was that he ‘purchased’ a half share in each of the three lots from his father in 1975 when he was 12 years old for the sum of $26,000. The husband also asserted that at the time of purchase he entered into a ‘mortgage’ with his father whereby he agreed to repay the debt of $26,000 by 1985. The husband conceded in cross examination that this was not a registered mortgage.
The wife did not take issue with the fact that the husband brought a half share interest in the original Property A property into the relationship. There was, however, a dispute about the nature and effect of the transactions which resulted in the husband divesting himself of his half share in the two 30 acre lots and the acquisition of a 100% interest in the 44 acre lot. This is dealt with in more detail below.
The parties separated initially on 3 December 2013 and took steps to value their assets in anticipation of reaching agreement regarding a property settlement. The wife initiated court proceedings on 28 April 2014.
At the first return date of those proceedings on 12 June 2014, the matter was adjourned by consent to 8 October 2014. On 8 October 2014, interim orders were made by consent which provided for a partial property settlement and various procedural orders in relation to outstanding issues (“October 2014 interim orders”).
In February 2015, the parties reconciled and on 20 May 2015, by consent, the parties agreed to strike out all extant applications as a result of their reconciliation.
Notwithstanding the reconciliation, the parties in fact ultimately separated on a final basis on 25 May 2015 resulting in the wife filing a fresh initiating application in this court on 22 September 2015.
On 7 November 2016, interim orders were made by consent providing, amongst other things, for a further part property settlement by way of a payment to the wife in the sum of $50,000 and a payment by the husband to the trust account of the wife’s lawyers’ for $50,000 (“November 2016 interim orders”) with such payments to be ‘categorised as part property settlement to the wife and shall be deducted from the wife’s ultimate property settlement entitlement’.
In October 2017, and prior to the hearing, the Property A property was sold pursuant to a put and call option deed. It was sold on terms for the full sale price of $10,350,000 with payments to be made as follows:
a)the sum of $1,000,000 on the signing of the option deed with such money paid into HWL Ebsworth Lawyers’ trust account (“first tranche”);
b)the sum of $1,000,000 payable 12 months after the signing of the option deed (“second tranche”);
c)the sum of $500,000 payable 24 months after the signing of the option deed (“third tranche”); and
d)the sum of $500,000 payable 36 months after the signing of the option deed (“fourth tranche”); and
e)the sum of $7,350,000 payable on the settlement date being 6 October 2022 (“fifth and final tranche”).
On 23 January 2018, the wife filed an application in a case in which she sought a distribution of the first tranche being held in the trust account of HWL Ebsworth Lawyers. The orders sought by the wife in this application in a case were as follows:
1.That the sum of $1,000,000 held on trust on behalf of the parties by HWL Ebsworth be distributed as follows:
a)the sum of $284,625 be paid to Mr R in respect of invoice issued by Company Omitted;
b)the sum of $1,434.31 be paid to Coulter Roache Lawyers in respect of invoice;
c)the sum of $4,482.63 be paid to HWL Ebsworth Lawyers in respect of invoice;
d)the sum of $2,218.48 be paid to HWL Ebsworth Lawyers in respect of invoice;
e)the sum of $15,000 be paid to the husband by way of reimbursement for outgoings paid in respect of the Property A property; and
f)the balance then remaining to be paid as follows:
i) in payment to the husband in the sum of $346,119.79;
ii) in payment to the wife in the sum of $296,119.79; and
iii) in payment to the wife in the sum of $50,000 to be paid into the trust account of Cahill & Rowe Family Law on account of the wife’s legal professional fees and disbursements.
2.That the husband pay the wife’s costs of and incidental to this application in a case.
3.Such further and other orders as this honourable court deems appropriate.
The wife’s affidavit dated 21 January 2018 in support of her application in a case sets out her current financial position and the expenses that she has incurred to date.
The husband did not file a response to the application in a case, however at the hearing, counsel for the husband indicated that his client agreed to the orders sought in paragraphs (a) to (e) of the wife’s application.
The husband’s counsel indicated that the husband opposed the order sought in paragraph (f) and the husband’s position in relation to the first tranche, after expenses were paid, was that:
a)he should be reimbursed the sum of $100,000 paid pursuant to the November 2016 consent orders;
b)each party should receive $100,000; and
c)the balance should be held on trust to meet outgoings in respect of the Property A property until final settlement occurs in 2022.
After some discussion between counsel for the parties, counsel for the wife said:
In relation to the holding costs issue… what we’ve agreed to, rather than leaving a sum of 300-plus thousand dollars (sic) in trust, is that prior to any distribution of the proceeds of sale in any given year, the sum of $30,000 be retained on account of holding costs and that will achieve the ends that the husband seeks to meet.[1]
[1] Transcript page 84 at lines 11 to 15.
How the $100,000 paid to the wife pursuant to the November 2016 consent orders is dealt with remains the only live issue for determination in relation to the application in a case.
On behalf of the wife, it was said that although she received some $417,000 in part property distributions since 2014, she has had to utilise some of this capital to meet her living expenses and her legal fees. She also gave evidence that she purchased motor vehicles for herself and her children and this, together with her legal fees account for the dissipation of these funds.[2]
[2] Transcript page 84 at lines 18 to 26.
It was put on behalf of the wife that as a result of the way in which the sale was structured with the bulk of the purchase price to be paid in 2022, she was now in a financially precarious position and would remain so for some time if the husband’s application was granted.
The husband however, did not put forward any evidence of prejudice to him if the wife’s application in this regard were granted.[3]
[3] Transcript page 85 at lines 1 to 3.
Counsel for the husband argued that he paid the $100,000 to the wife from his post-separation inheritance and therefore this ought to be repaid to him now.
The husband also sought an order for the removal of the wife’s caveat over the Property A property. The wife did not oppose such an order and stated that she had already provided instructions to this effect to her solicitor.
For the reasons which follow, I am not satisfied that it is just and equitable in all the circumstances that the $100,000 paid to the wife pursuant to the November 2016 interim orders should be deducted from any entitlement she has in the first tranche of the proceeds of sale of the Property A property. Rather, I have had regard to the payment the wife received in determining what orders are just and equitable in all of the circumstances and have factored in the agreement reached between the parties for the $100,000 to be taken into account and deducted this from the parties’ overall property settlement entitlements.
What is the court being asked to do?
The parties conceded that contributions during the relationship were equal.
Neither party is seeking an adjustment with respect to section 75(2) factors.
The husband asserts that in making final orders in this matter, a significant loading ought to be applied in his favour, particularly having regard to:
a)the fact that he brought the Property A property ‘(subject to minor readjustments with the original co-owner)’;[4]
b)the distributions to date; and
c)the delayed superannuation split ‘working significantly in the wife’s favour’.[5]
[4] Paragraph 7 of the husband’s summary of legal argument.
[5] Paragraph 7 of the husband’s summary of legal argument.
At trial, the husband’s proposal was that the sale proceeds of the Property A property, after costs and expenses, be distributed between the parties in the proportions of 70% to him and 30% to the wife and that a splitting order be made to equalise the parties’ superannuation entitlements.
The wife’s proposal was that the proceeds of sale of the Property A property ought to be split on a 50/50% basis and a splitting order be made to equalise the parties’ superannuation entitlements.
The legislation
Section 79(1) of the Act provides that the court may make such orders as it considers appropriate, altering the interests of the parties in property of the parties to a marriage or either of them.
Subsection 79(2) of the Act relevantly provides that:
The 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.
Where the court is satisfied that it is just and equitable to make an order altering the property interests of parties, section 79(4) of the Act sets out the matters the court must take into account when considering what orders, if any, should be made for the alteration of the parties’ interests. I do not propose to set out section 79(4) of the Act in full.
The approach to applications under section 79
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 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.[6]
[6] Stanford v Stanford (2012) 247 CLR 108 at [35].
The court went on to say at paragraphs 41 and 42:
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. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4)
(emphases added) (footnotes omitted).[7][7] Stanford v Stanford (2012) 247 CLR 108 at [41]-[42].
In this case, the parties have been in a very long marriage which has produced three now adult children. Notwithstanding attempts at reconciliation, their relationship has ended and they are each seeking orders of this court pursuant to section 79 of the Act.
Indeed, by consent they have distributed the bulk of the assets they owned, either jointly or individually and now seek orders of the court dealing with the proceeds of sale of the one remaining asset effectively in the pool.
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.
Having come to this view, I turn to the approach that the court takes in considering what orders are appropriate under section 79 of the Act. In this context, regard can be had to the following comments of the High Court in Norbis v Norbis (1986) 161 CLR 513 in which Justices Mason and Dean said:
Here the order is discretionary because it depends upon the application of a very general standard – what is ‘just and equitable’ – which calls for an overall assessment in the light of the factors mentioned in s.79(4), each of which in turn calls for an assessment of circumstances…[8]
[8] Norbis v Norbis (1986) 161 CLR 513 at [4]; see also Mallet v Mallet (1984) 156 CLR 605 at [609].
The approach that the court generally takes in considering what orders are appropriate under section 79 of the Act, are aptly summarised in
In the Marriage of Hickey[2003] FamCA 395. Essentially this requires the court to:
a)identify the assets and the value of the assets in the property pool;
b)determine the contributions made by each of the parties to those assets, both directly and indirectly and in financial and non-financial terms;
c)determine whether any adjustment is required for section 75(2) factors; and
d)in light of those findings, determine what orders for the division of property is just and equitable.
In Bevan v Bevan (2013) 279 FLR 1; (2013) 49 Fam LR 387; [2013] FamCAFC 116 (“Bevan”), the court acknowledged that prior to Stanford, the four stage process was the manner in which section 79 proceedings were commonly dealt with.[9] At paragraph 61 however, Bryant CJ and Thackray J stated:
Although, the four step process has been regularly applied, the Full Court has stressed it is no more than a means to an end, since the statutory obligation is to alter existing interests only if it is just and equitable to do so. Thus in Norman v Norman [2010] FamCAFC 66 at [60], the Full Court (Finn, May and Murphy JJ) said:
It is the mandatory legislative imperative (to reach a conclusion that is just and equitable) that drives the ultimate result. For all its usefulness and merit as a ‘disciplined approach’ or a ‘structured process of reasoning… the
‘three-step’ or ‘four-step’ approach merely illuminates the path to the ultimate result.[10][9] Bevan & Bevan (2013) 279 FLR 1; (2013) 49 Fam LR 387; [2013] FamCAFC 116 at [59]-[60].
[10] Bevan & Bevan (2013) 279 FLR 1; (2013) 49 Fam LR 387; [2013] FamCAFC 116 at [61].
At paragraph 72, Bryant CJ and Thackray J went on to say:
It follows that judges would be well advised to avoid what we consider to be arid discussion of the ‘stage in the process’ at which ‘adjustments’ are permissible. Such discussion tends to elevate the four step process to the status of a statutory edict, when in fact it is no more than a shorthand distillation of the words of a statute which has but one ultimate requirement, namely not to make an order unless it is just and equitable to do so.[11]
[11] Bevan & Bevan (2013) 279 FLR 1; (2013) 49 Fam LR 387; [2013] FamCAFC 116 at [72].
Key issues
For the reasons set out above, the key issues in this case are:
a)the assets and liabilities of the parties and the impact of the interim orders; and
b)the contributions of each party both at the commencement of the relationship and post-separation, having regard to the following:
i)the fact that the parties concede, quite rightly that their contributions during the relationship were equal; and
ii)the weight that ought to be given to these contributions, given the length of the marriage and other relevant factors.
Findings as to asset pool and impact of interim orders
At the time of hearing, all assets (aside from motor vehicles, furniture and other personal items) belonging to the parties had been sold and, with the exception of the Property A property, the proceeds of sale had been partly distributed to the parties on an interim basis.
The parties also agreed that an order equalising their respective superannuation entitlements should be made.
The parties agreed to a partial distribution of the assets in October 2014 which saw the wife receive a payment in the sum of $135,000 on or before 30 November 2014 in return for the wife relinquishing all of her right, title and interest in the property situate at and known as Property B, (“the Property B property”).
The wife now says that in considering final property orders, the court should have regard to the ultimate price obtained for the sale of the Property B property. The husband opposes this approach.
The October 2014 interim orders relevantly provided:
5.The husband pay to the wife the sum of $135,000.00 (the “payment”) on or before 30 November 2014 (the “due date”).
6.Contemporaneously with the payment:
(a)the wife relinquish all of her right, title and interest in the real property situate at and known as Property B, being the whole of the land more particularly described in the Title Volume Folio (the “real property”);
(b)the husband discharge or refinance mortgage no. to Bank 1 (the “mortgage”) and indemnify the wife against any liability pursuant to the mortgage, including mortgage payments, and all rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind;
(c)the wife do all such acts and things and sing all such documents as may be required to instruct her solicitor to remove Caveat registered against the real property;…
The October 2014 interim orders contained the following notations:
A.Both the payment referred to in paragraph 5 herein and the real property shall be removed from calculations as to the property of the parties taken into consideration when determining the division of the property of the parties’ marriage.
B.The parties agree that the mortgage encumbering the real property had a balance of $386,000 on the date agreement was reached with respect to these interim orders.
C.The parties agree that the debt be excluded from further settlement discussions with respect to the division of the property of the parties’ marriage.
The evidence before the court is that at the time the October 2014 interim orders were made, the Property B property was valued at $600,000. The husband’s evidence, which does not appear to be disputed by the wife, is that at that time there was a mortgage of $400,000 over the Property B property. This left equity at the relevant time of $200,000. A payment to the wife of $135,000 would see her receive 67.5% of the net equity of the Property B property at that time and based on that valuation.
The October 2014 interim orders also provided for the sale of the property situate at and known as Property C, (“the Property C property”) and for the sale proceeds to be equally distributed between the parties, including the equal division of any capital gains tax liability. The parties each received $232,372 (net of sale costs and expenses) following the sale of the Property C property.
The Property C property was ultimately sold in about June 2015 for $750,000. The wife claims that this amount should be taken into account in determining what orders would be just and equitable.
In response, the husband does not take issue with these facts but states that the ultimate price ‘was obtained after (he) expended considerable time, effort and materials on the presentation of the property.’[12] The husband gave evidence that he spent approximately $20,000 in selling costs, $30,000 in materials and his own unpaid labour of many hours in improving the property between the payment to the wife and the eventual sale.[13]
[12] Paragraph 8(c)(iv) of the husband’s affidavit filed 21 August 2017.
[13] Paragraph 8(c)(iv) of the husband’s affidavit filed 21 August 2017.
The November 2016 interim orders further provided by consent that:
a)the husband would transfer $50,000 to the wife’s lawyers in respect of a payment of her legal fees;
b)the husband would pay to the wife a further sum of $50,000; and
c)the sums payable by the husband pursuant to paragraphs (a) and (b) above ‘be categorised as part property settlement to the wife and shall be deducted from the wife’s ultimate property settlement entitlement’.[14]
[14] Paragraph 3 of the interim orders made by consent on 7 November 2016.
It is not in dispute that the husband made these payments in accordance with the November 2016 interim orders. However, the husband’s evidence is that he made this payment from his post-separation inheritance and therefore seeks a reimbursement of those monies from the proceeds of sale of the Property A property prior to any payment to the wife.
I find that notwithstanding the October 2014 interim orders, it is appropriate to have regard to the ultimate sale price achieved for the Property B property (net of the expenses incurred by the husband to achieve that sale price) in determining what is just and equitable in all the circumstances. To the extent that a higher price was ultimately achieved, this is properly characterised as a further contribution on the part of the husband.
The husband also claims that the delay in the making of a superannuation splitting order has resulted in the wife having access to a greater base amount and this also needs to be taken into account in the court’s assessment of what justice and equity requires. Again, this is a further post-separation contribution to be weighed in the husband’s favour.
Given the facts in this case, particularly the interim property distributions already made and the quantum of the proceeds of sale from the Property A property compared to the remainder of the assets of the parties, the focus of the submissions was on the Property A property. It is important however, in ensuring the final orders are just and equitable, that regard is had to all the assets of the parties that either remain available for distribution or have already been distributed to the parties pursuant to interim orders.
To date, as a result of the October 2014 interim orders and the November 2016 interim orders, the wife has received a total of $467,372 consisting of:
a)the sum of $135,000, being her share of the proceeds of the sale of the Property B property;
b)the sum of $232,372, being half of the net proceeds of sale of the Property C property;
c)a payment of $50,000 by the husband pursuant to the November 2016 interim orders; and
d)the sum of $50,000 towards her legal fees pursuant to the November 2016 interim orders.
To date, consequent upon the October 2014 interim orders and the November 2016 interim orders, the husband has received a total of $411,372 consisting of:
a)the net proceeds of the sale of the Property B property of $179,000 (being the sale price of $750,000 less the mortgage of $386,000, less the $135,000 paid to the wife and less his expenses in preparing the property for sale and sale costs of $50,000); and
b)the sum of $232,372, being half of the net proceeds of sale of the Property C property.
Further to these amounts which have already been distributed, I find that the net asset pool available for distribution between the parties comprises the following:
Non superannuation assets Ownership Value Property A property Husband $10,350,000 Bank 2 account Wife $3,693 Bank 3 account Husband $121,322 Funds in Cahill & Rowe Family Law trust account Wife $18,654 Vehicle 1 Wife $35,000 Vehicle 2 Husband $38,000 motorcycle Husband $18,000 Total assets $10,584,669
I also find that the parties’ liabilities are as follows:
Liabilities Ownership Value Outstanding income tax Wife ($3,000) Outstanding income tax Husband ($43,546) Mastercard Husband ($5,000) Fees payable to Mr R Joint ($284,625) Fees payable to Coulter Roache Lawyers Joint ($1,434.31)
Fees payable to HWL Ebsworth Lawyers Joint ($4,482.63)
($2,218.48)Reimbursement to the husband for outgoings paid in respect of the Property A property Wife ($15,000) Income tax liability[15] Husband ($1,191,450) Total liabilities ($1,550,756.42) Net non-superannuation assets $9,033,912.58 [15] See affidavit of Mr A filed 2 February 2018. Mr A deposes that this liability will accrue at final settlement in 2022.
In the lead up to these proceedings, there was some concern about the capital gains tax implications of the sale of the Property A property. However, during opening address, the wife’s counsel indicated that he was content to rely upon the husband’s evidence for the purposes of taking into account the capital gains tax ‘both payable and the time upon which it becomes payable’.
Superannuation Ownership Value Super Fund X
- Defined benefit
- Accumulation interest
Total
Husband $325,025
$27,116
$352,141Super Fund Y Superannuation Wife $19,545 Total superannuation $371,686
Contributions
Initial contributions
It is not disputed that at the time of commencement of cohabitation, the wife did not have any assets.
As stated above, there is no dispute that the husband owned a half interest in three parcels of land at Property A and that in or about 1975, he purchased this interest from his father for approximately $26,000.
The husband’s evidence, which I accept, is that in early 1987, some 18 months prior to cohabitation, he purchased a one sixth share in the Business Q (known as the Business Q) for which he paid $100,000. He stated that he funded this purchase entirely through a loan from his father. When he sold his interest approximately one year later, also prior to commencing cohabitation with the wife, he received $185,000. He repaid $35,000 to his father resulting in an outstanding loan of $65,000. He used the balance of $135,000 to purchase the property which became the former matrimonial home at Property B (“the Property B property”).
The parties agreed that over the course of their relationship, they received various loans from the husband’s family. The wife’s evidence was that those loans were repaid throughout the relationship. The husband disputed this and said that at the time of separation, there was an outstanding loan to his mother in the sum of $130,000 which he repaid out of his inheritance without any contribution from the wife. I accept the husband’s evidence in this regard.
Contributions during the relationship
The parties quite properly agreed that their contributions during the relationship ought to be treated as equal.
The parties agreed that over the course of their relationship, the husband worked initially as an (occupation omitted) and then from about 2004, as a (occupation omitted) with the (employer omitted). The wife gave evidence, which I accept, that prior to the birth of their eldest child, Mr C, she was employed as a (occupation omitted) but that she ceased employment following Mr C’s birth and for a period of 12 years thereafter, undertook the role of primary caregiver and homemaker.
The parties bought and sold various properties, often with the benefit of loans from the husband’s family:
a)in 1990, the husband purchased the property at Property B, for $120,000 with the purchase price partly funded by further borrowings ($100,000) from the husband’s father;[16] and
b)he purchased the Property C property for $78,000, again with the benefit of a loan from the husband’s mother of $40,000. This was a commercial property and was rented with the proceeds used to repay the husband’s mother and provide additional income for the family.
[16] The husband’s evidence is that when this property was ultimately sold for $124,000 in 1993, the $100,000 loan was repaid to his father.
It is also common ground that throughout their relationship, the parties operated a number of businesses with varying degrees of success:
a)in or about 1989, the parties operated a Business R franchise in partnership with a Mr J – the wife’s evidence, which I accept, was that she worked in this business on a part-time basis;
b)the parties also operated a Business S. The wife gave evidence, which I accept, that she also worked in this business on a part-time basis; and
c)in 1993, the husband stopped working as an (occupation omitted) and the parties established the business, ‘Business P’ (“the Business P business”), in which the husband worked on a full-time basis and the wife also worked.[17]
[17] There is a dispute between the parties as to the extent to which the wife worked in the Business P business which is ultimately not of significance to the determination of the issues in dispute in this case.
It is not disputed that the various businesses the parties ran and other investment properties were ultimately sold but none of them produced significant profits.
The wife’s evidence was that in about 2004, she completed a (qualifications omitted) and worked as a (occupation omitted) on a part-time basis. The wife also gave evidence that in 2008, she undertook full-time studies in (course omitted) for an 18 month period during which time she continued working as a (occupation omitted) on a part-time basis.
The husband also gave evidence, which I accept, that in the latter part of their marriage, the parties were living beyond their means and to meet those expenses, the parties received further loans from the husband’s mother of more than $100,000.[18]
[18] Paragraph 16(g) of the husband’s affidavit filed 21 August 2017.
Both parties gave evidence that when it became apparent that the Property A property was likely to significantly increase in value as a result of the rezoning, they increased their expenditure.
The husband relevantly stated at paragraph 35 of his affidavit filed
21 January 2015:
As a family, we generally lived well beyond our means as
(a)we had the financial support from my parents throughout our marriage; and
(b)we had the expectation of selling the Property A property for a considerable sum when we were older as we expected it to reach its development potential by that time.
The husband asserted that the wife would have a higher earning capacity if she were to update her qualifications in (employment omitted). I accept the wife’s evidence that the rates of pay for a (occupation omitted) are not significantly different to that of a (occupation omitted). I also accept the wife’s evidence that it would not only be difficult for her to ‘update’ her qualifications in (employment omitted) but given her back issues (noting that the husband conceded that she has two steel rods in her back), it is questionable whether she would be able to meet the physical demands of (employment omitted) in any event.
Post-separation contributions
The husband also gave evidence and I accept that he made the following contributions post-separation:
a)the repayment of the parties’ debt to his mother in the sum of $130,000 without any contribution from the wife;
b)child support in respect of Mr B at a higher rate than he believed he ought to have paid although this was not specifically quantified;
c)all outgoings for the Property C property and the Property B property until their sale without any contribution from the wife, again without expressly quantifying this amount;
d)payment of expenses incurred by the family during the period of attempted reconciliation on holidays to (country omitted) and the wife’s expenses on a holiday to (country omitted);
e)a further payment of $2,000 to the wife at her request during the period of attempted reconciliation; and
f)meeting the children’s living expenses whilst they lived with the husband at the Property B property until its sale.
The wife’s evidence, which I accept, is that post-separation she has had to apply some of the monies received as part property settlement towards her reasonable living expenses. She also purchased her current motor vehicle, gifted her previous motor vehicle to her son Mr B and purchased a motor vehicle for her other son Mr A.
I find that the husband’s post-separation contributions exceed those of the wife and that this contribution ought to be reflected in the final orders.
Husband’s inheritance
The husband gave evidence that after the initial separation and before attempts at reconciliation, his mother passed away on 2014 and that as a result, he received an inheritance of approximately $220,000 from her estate.
The husband also stated that the inheritance he received from his late mother’s estate was in fact reduced from his full entitlement of $330,000 to reflect the fact that he had to repay his outstanding loan to his mother of $130,000 which had been borrowed during the marriage to meet the needs of the family and assist with the Business P business. The husband stated that although this was a loan taken out during the marriage, the wife made no contribution towards its repayment.[19]
[19] Paragraph 8(c)(v) of the husband’s affidavit filed 21 August 2017.
There is insufficient evidence before the court to determine whether any of the husband’s inheritance still exists and has otherwise not been included in the asset pool; for example, whether this remains part of the husband’s savings in his bank account. I have had regard to the husband’s repayment of the loan of $130,000 to his mother using some of the funds in determining what is just and equitable in all the circumstances.
Property A property
It was submitted on behalf of the husband that in assessing his contribution, where an asset which was brought into the relationship is intact at the time of separation, it is important to have regard to the value of that asset at the time of trial to assess contribution, not the value of the asset at the commencement of cohabitation.
In support of this proposition, counsel for the husband referred the court to the decision of the Full Court of the Family Court in
Williams v Williams[2007] FamCA 313 (“Williams”) where the Full Court said:
We think that there is force in the proposition that a reference to the value of the item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution towards the parties. Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of this relationship.[20]
[20] Williams v Williams [2007] FamCA 313 at [26].
The wife’s counsel noted that Williams involved a relationship of 11 years with no children. Moreover, it was submitted that the comments of the Full Court extracted above should be considered in their entirety, particularly having regard to the last sentence, which makes it clear that in any event, recognition must be given to the ‘myriad of other contributions’ made by the parties.
It was submitted on behalf of the wife that a more apt decision to have regard to in these circumstances is the decision of a single judge of the Family Court of Western Australia in Zappacosta v Zappacosta
(1976) FLC 90-089; (1976) 2 FamLR 11,214; (1976) 26 FLR 412 (“Zappacosta”). This case involved a similar issue to the present case insofar as land which had been purchased in the husband’s name increased significantly after a rezoning decision.Although the reasoning in Zappacosta is of some assistance, it is not directly on all fours with the present facts given that in that case the parties were actually married prior to the husband coming to Australia from Italy and purchasing the orchard (being the land which was the subject of the dispute and which had significantly increased in value following a rezoning decision). In addition, the family lived in a modest dwelling on that property for some time after the wife’s arrival in Australia.
I note that in Zappacosta, McCall J said:
This does raise the question as to whether a windfall such as the rapidly accelerated value of a property due to re-zoning should be dealt with in any special way. On consideration I am of the view that if a property appreciates, as obviously this one has, but not due to any particular effort or act of either of the parties, then the reason why the property did so appreciate is not relevant to the question of what interests the court may decide that the parties to the marriage should have in it when exercising jurisdiction under section 79 of the Act. It is simply a windfall and, accordingly, in my view neither party has any greater or lesser claim to the benefits of the windfall. Accordingly, in my view, the increased value of the property due to re-zoning is not a relevant consideration in my decision.[21]
[21] Zappacosta v Zappacosta (1976) FLC 90-089 at [75421].
Counsel for the wife relied upon this comment in support of his submission that having regard to the concessions made by the husband that he did not make any particular contribution to the rezoning of the property, it would not be just and equitable for him alone to be entitled to the capital increase, or to 70% of the capital increase, resulting from the rezoning decision.
The court was also referred to the decision of the Full Court of the Family Court in the case of Wells & Wells (1977) FLC 90-285 (“Wells”) in which his Honour, McCall J’s comments referred to above, were stated with approval. Although these comments were approved in Wells, the facts are also not directly comparable to those in this case before me. In particular, Wells was concerned with was a short marriage of less than three years.
Counsel for the wife also referred the court to Zyk & Zyk (1995) FamCA 135; (1995) FLC 92-644; (1995) 19 FamLR 797; (1997) 128 FLR 28 (“Zyk”), a decision of the Full Court of the Family Court (Nicholson CJ, Fogarty and Baker JJ) in support of the proposition that in considering how the proceeds of the Property A property ought to be treated, the court must have regard to how the parties themselves intended that it be dealt with.
Both parties gave evidence that when the second 30 acre lot was sold, half the proceeds were applied towards expenses for the family and the other half were applied towards the purchase of the remaining half share in the 44 acre lot.
In Zyk, the Full Court after referring to Zappacosta and Wells noted:
Those cases were concerned with the situation where there has been an increase in the value of a property of the parties during the course of the marriage arising from some outside circumstance such as rezoning and which occurred independently of any activity of the parties. Those circumstances are often generally referred to as a “windfall” and were treated in that way in those cases, rather than considering them as contributions.[22]
[22] Zyk & Zyk (1995) FLC 92-644; (1995) 19 FamLR 797; (1997) 128 FLR 28 at [31].
Zyk concerned a lottery win and the issue in that case was how that ought to be treated; in particular, whether it ought to be dealt with as a ‘windfall’ or a contribution. The Full Court concluded that for the purposes of a section 79 analysis, the better approach is to consider any winnings as contributions. As noted by the Full Court, ‘the critical question is – by whom is the contribution made?’[23]
[23] Zyk & Zyk (1995) FLC 92-644; (1995) 19 FamLR 797; (1997) 128 FLR 28 at [50].
The Full Court went on to say:
In the ordinary run of marriages, a ticket is purchased by one or other of the parties from money which he or she happens to have at that particular time. That fact should not determine the issue. Where both parties are in receipt of income and where their marriage is predicated upon the basis of each contributing their income towards the joint partnership constituted by their marriage, the purchase of the ticket would be regarded as a purchase from joint funds in the same way as any other purchase within that context and would be treated accordingly. (emphasis added)
… In the sort of case to which we have referred above, the conclusion would be that the ticket was purchased by joint funds and the contribution of the prize would be seen as a contribution by the parties equally…[24]
[24] Zyk & Zyk (1995) FLC 92-644; (1995) 19 FamLR 797; (1997) 128 FLR 28 at [51].
The Full Court concluded that:
From the time of the marriage the parties jointly shared their respective incomes. The husband continued to purchase his share of the syndicate ticket each week, but from then on the purchases should be treated as coming from joint income… consequently… [the lotto ticket] should have been treated as a joint contribution of the parties. [25]
[25] Zyk & Zyk (1995) FLC 92-644; (1995) 19 FamLR 797; (1997) 128 FLR 28 at [58].
Counsel for the husband conceded that in determining this matter, appropriate recognition ought to be given to the contribution that the wife made to the relationship. The husband’s case was that 30% of the Property A property properly recognised the wife’s contribution.
In his closing submissions, counsel for the husband submitted that it was clear on the basis of the evidence that the Property A property was effectively self-funding throughout the life of the marriage and that the parties did not contribute to its upkeep from their resources; it was essentially ‘tucked away in the top drawer of cupboard and untouched by the marriage.’[26]
[26] Transcript page 52 at lines 10 to 25.
Counsel for the husband sought to distinguish Pierce v Pierce [1998] FamCA 74 by arguing that this was not a case where the property brought in at the commencement of the relationship, became, for example the family home. Rather, he submitted that the Property A property remained entirely separate throughout the marriage.[27]
[27] Transcript page 74 at lines 19 to 26.
The wife argued that to accept the husband’s approach would “ignore the miscellany or the myriad of contributions made by (her)”[28] and would not give proper regard to “the fact that in 1999 or 2000 the other half of that parcel was purchased by the parties.”[29]
[28] Transcript page 90 at lines 15 to 16.
[29] Transcript page 90 at lines 21 to 22.
The wife’s counsel also sought to distinguish many of the authorities to which the husband’s counsel referred the court to on the basis that this case relates to a marriage of 27 years’ duration and which resulted in three children.
As set out above, it was common ground that the parties had, over the course of their relationship, started numerous businesses, some of which failed and some of which succeeded. Both parties were, to varying degrees involved in the establishment and running of those businesses. Counsel for the wife pointed out that this case was primarily about a ‘marriage shared between two people who shared in the vicissitudes of life.’[30]
[30] Transcript page 86 at lines 23 to 24.
It was submitted on behalf of the wife that it would not be just and equitable, having regard to her contribution over the course of the relationship, to give her only 30% of the proceeds of sale of the Property A property having regard to ‘the stated assumptions… in this marriage’.[31]
[31] Transcript page 92 at lines 24 to 25.
The court was referred to the recent decision in Wallis v Manning (2017) FLC 93-759; [2017] FamCAFC 14 (“Wallis”) in support of the wife’s proposal that a 50/50% distribution was appropriate.
In Wallis, the judge at first instance made an order that the property be divided on a 70/30% basis in favour of the husband on the basis that within the first three years of the marriage, the husband’s father had gifted to him a significant share of the property on which the parties conducted a farming business. The wife appealed on the basis that, among other things, the court failed to give sufficient weight to her contribution over the course of the marriage as compared to that made by the husband’s father.
Wallis involved a 27 year marriage and three children of the marriage, all of whom were adults at the date of separation. In that case, the land which was gifted by the husband’s father became the property on which the parties lived, conducted their business and from which they derived significant income.
In considering the question of contributions, the Full Court said:
The length of a marriage is important, then, in assessing the respective contributions of the parties, particularly when it is said that significant capital contributions made early in the marriage are a dominant feature of that assessment.[32]
[32] Wallis v Manning (2017) FLC 93-759; [2017] FamCAFC 14 at [117].
…
The gifts made by the husband’s father were made early in a long marriage. The use to which those gifts were put rendered them of fundamental importance to the parties throughout the marriage. They provided the foundation for a farming business, operated as a partnership between the husband and the wife, from which the marriage derived income during its duration. They provided land upon which the parties home was situated and, thus, a place to live.[33]
[33] Wallis v Manning (2017) FLC 93-759; [2017] FamCAFC 14 at [120].
Particularly relevant for the purposes of this case, the Full Court went on to say:
There can be little doubt on the evidence that each party contributed to the maximum of their respective capacities and abilities within these various roles. There was a genuine mutuality to their relationship and it, and the financial decisions and arrangements within it, were subject to the ‘unstated assumptions’ that devolve from that mutuality.[34]
[34] Wallis v Manning (2017) FLC 93-759; [2017] FamCAFC 14 at [122].
In Wallis, the court concluded that the evidence supported a finding that the husband’s contribution should be assessed as greater than that of the wife’s and, after reviewing a range of comparable decisions, concluded that the parties’ contributions were properly assessed ‘in the proportion of 57.5% to the husband and 42.5% to the wife.’
Whilst that decision is of assistance to some degree, the facts in Wallis are quite different to the present facts in that the land in that case contributed by the husband’s father, became the family farm in which the wife both worked and to which she contributed in a practical sense in addition to her other contributions during the marriage.
By comparison, in this case the Property A property largely sat idle for the duration of the marriage. I find that the costs associated with maintaining the Property A property were not significant. Neither party made a significant contribution to its upkeep or to the eventual increase in its value.
Conclusions
As stated to date, the parties in this proceeding have received a partial distribution of their assets (other than the Property A property) which is roughly equal, although the wife has received some $50,000 more than the husband, noting that the parties agreed that $100,000 received by her is to be ‘deducted’ from any final property settlement.
It is also evident from the table of assets and liabilities set out above that, leaving aside the Property A property and the distributions already made, the husband also has just over $70,000 in net assets more than the wife.
At over $10.35 million, the value of the Property A property represents almost 90% of the non-superannuation asset pool including both current assets and prior distributions made pursuant to interim orders.
Notwithstanding the post-separation contributions which the husband refers to in his evidence and to which regard must be had, the key basis upon which the husband asserted that he should receive 70% of the proceeds of the Property A property, is that he brought the Property A property into the relationship and but for this fact, the parties would now not have over $10 million to distribute between them. He says that in those circumstances, a 30% distribution to the wife is just and equitable.
In this regard, the husband argued that although there had been a “rearrangement” of the ownership of the original Property A property, in essence, he brought the whole of the 44 acre lot which has now been sold.
It is conceded that the husband was, at all times, the registered owner of the Property A property. This, of course, is not determinative of the issues now before this court.
In addition to the fact that this was a long marriage which produced three now adult children and the myriad of contributions made by the parties over that period, the wife also argued that the Property A property ought to be treated no differently to other assets of the parties. In support of this, the wife submitted:
a)all other assets have been divided equally, and this is evidence not only of a ‘tacit but an express concession by the husband that this was a marriage where the contributions otherwise were equal’[35]; and
b)regard must be had to the impact of the rezoning on the value of the Property A property as opposed to anything which either party personally did.
[35] Transcript page 92 at lines 31 to 33.
It is the case and I find that the husband, in bringing the Property A property into the relationship, has made a significant contribution which needs to be appropriately recognised in the division of property between the parties.
This contribution however, must be weighed against the myriad of contributions made by both parties throughout the course of their relationship which has spanned 27 years and resulted in three adult children. It also has to be weighed against the fact that this was a union in which the parties clearly, by their actions, shared in the vicissitudes of the relationship, much of which is demonstrated by the numerous businesses and business ventures which the parties undertook throughout their relationship.
Reorganisation of the Property A property
In weighing up the husband’s initial contribution with the parties’ contributions over the course of the marriage, some consideration must also be given to the nature and effect of the ‘reorganisation’ of the ownership in the three lots.
The husband, as stated above, sought to characterise the sale of the two 30 acre lots and his purchase of the other half share in the 44 acre lot as a ‘reorganisation’ of his interests in the Property A property at the commencement of cohabitation.
The facts are not in dispute, namely:
a)the husband originally had a half share interest in three parcels of land at Property A, two 30 acre lots and one 44 acre lot and that he owned this interest prior to the commencement of cohabitation;
b)in 1998, some ten years after commencing cohabitation with the wife, the husband reached an agreement with the other half share owner, Mr G that Mr G would sell lot 2 of plan of subdivision, being one of the 30 acre lots and retain the proceeds of that sale and the husband would then retain the proceeds of the sale of the other 30 acre lot if and when he decided to sell it;
c)in about 2001, the husband in fact did sell the remaining 30 acre lot for $215,000 and the proceeds of that sale were applied as follows:
i)towards payment of expenses of sale;
ii)the sum of $105,000 was used for family purposes; and
iii)the sum of $105,000 was used to purchase the remaining half share interest from Mr G in the remaining 44 acre lot.
As stated above, the husband seeks to characterise this transaction as a mere ‘reorganisation’ of his interests in the Property A property. It is clear however, that the proceeds of the sale of the 30 acre lot were treated by the parties, at least to the extent of $105,000, as assets available for the benefit of the family.
In his affidavit, the husband deposes the following:
My contribution from my unencumbered interest in the original Property A property consisted of the:
(a)$105,000 surplus from the sale of lot 1 referred to… above and
(b)the current value of the 44 acre lot which had been funded entirely from my original interest in the property.[36]
[36] Paragraph 12(a)(vii) of the husband’s affidavit filed 21 August 2017.
Although the property was and remained, at all relevant times, registered in the husband’s name, the decisions to enter into the agreement set out above with Mr G and then to sell the second lot and purchase the other half share of the 44 lot, was made some 10 years into the relationship between the parties. Moreover, almost half of the proceeds of sale of the 30 acre lot were applied towards expenses for the benefit of the family.
Having regard to the timing of this sale, and the purpose for which the proceeds of sale were applied, there is some merit to the proposition that the decision to purchase the half interest in the 44 acre lot in 2001 was a joint decision between the parties and that the money used was, at that point in time, money otherwise available for the family. The question is whether that constitutes a contribution on the part of the wife.
I am persuaded that by supporting the husband in his decision to use the proceeds of the sale of the 30 acre lot to purchase the other half share in the 44 acre lot, the wife made some, albeit a non-financial, contribution to the ultimate position that the parties found themselves in, namely to own outright a 44 acre lot of land which has subsequently increased in value. This contribution, however, must be weighed against the fact that without the husband’s initial interest in the original Property A property, the parties would not have had the opportunity to use some of the proceeds of the sale of the 30 acre lot to purchase the remaining half share in the 44 acre lot at all.
What is just and equitable?
Having regard to the findings and analysis above, I conclude that it is just and equitable to make orders which distribute the parties’ non-superannuation assets in the proportions of 34% to the wife and 66% to the husband and an order equalising the parties’ superannuation entitlements.
This recognises the significant contribution made by the husband at the commencement of the relationship in bringing both the property which became the matrimonial home and his half share interest in the original Property A property. It also recognises the post-separation contributions which the husband has made and which have been outlined above; in particular, the repayment of a loan to his mother in the order of $130,000.
Given the nature of the sale with final settlement not occurring until 2022 and the fact that the husband will ultimately receive a higher proportion of the sale proceeds, the orders provide for an equal distribution between the parties in each of the first four tranches with an adjustment to the husband in the final tranche that sees him receive 66% overall of the non-superannuation assets.
To give effect to these findings and my decision, I propose making the following orders dealing with both the wife’s application in a case and the substantive application:
a)the proceeds of sale of the Property A property be distributed on behalf of the parties as follows:
i)the first tranche of the purchase price, currently held in HWL Ebsworth Lawyers’ trust account be applied as follows:
(i)the sum of $284,625 be paid to Mr R in respect of invoice issued by Company Omitted;
(ii)the sum of $1,434.31 be paid to Coulter Roache Lawyers in respect of invoice;
(iii)the sum of $4,482.63 be paid to HWL Ebsworth Lawyers in respect of invoice;
(iv)the sum of $2,218.48 be paid to HWL Ebsworth Lawyers in respect of invoice;
(v)the sum of $15,000 be paid to the husband by way of reimbursement for outgoings paid in respect of the Property A property;
(vi)the sum of $30,000 to be held in the HWL Ebsworth Lawyers trust account to be used for any holding costs associated with the Property A property; and
(vii)the balance to be distributed equally between the parties so that the husband receives $331,119.79, the wife receives $281,119.79 and $50,000 be paid into the trust account of Cahill & Rowe Family Law on account of the wife’s legal professional fees and disbursements;
ii)the second tranche be distributed as follows:
(i)the sum of $30,000 to be held in HWL Ebsworth Lawyers’ trust account to be used for any holding costs associated with the Property A property; and
(ii)the balance to be distributed between the parties as follows:
a. $485,000 to the husband; and
b. $485,000 to the wife; and
iii)the third tranche be distributed as follows:
(i)the sum of $30,000 to be held in HWL Ebsworth Lawyers’ trust account to be used for any holding costs associated with the Property A property; and
(ii)the balance to be distributed between the parties as follows:
a. $235,000 to the wife; and
b. $235,000 to the husband;
iv)the fourth tranche be distributed as follows:
(i)the sum of $30,000 to be held in HWL Ebsworth Lawyers’ trust account to be used for any holding costs associated with the Property A property; and
(ii)the balance to be distributed between the parties as follows:
a. $235,000 to the wife; and
b. $235,000 to the husband; and
v)the fifth and final tranche be distributed as follows:
(i)the sum of $30,000 to be held in HWL Ebsworth Lawyers’ trust account to be used for any outstanding holding costs associated with the Property A property;
(ii)the sum of $1,191,450 to discharge the husband’s income tax liability arising from the sale of the Property A property; and
(iii)thereafter, the balance to be distributed to the parties as follows:
a. $1,511,464.45 to the wife; and
b. $4,617,085.55 to the husband.
The effect of these orders is that the wife will receive (in addition to what she has already received) a total of $2,797,584.24 and the husband will receive (in addition to what he has already received) a total of $5,903,205.34. When combined with the distributions already made and their remaining assets, this represents an overall division of 66% to the husband and 34% to the wife of the non-superannuation assets.
To the extent that there is any outstanding money held on trust by HWL Ebsworth Lawyers after payment of all costs associated with the Property A property, that money is to be distributed between the parties in the proportions of 66/34% in favour of the husband.
Further, if there are any outstanding costs associated with the sale of the Property A property not otherwise provided for in the five tranches, the parties will contribute to those costs in the proportions of 66% by the husband and 34% by the wife.
I also make orders:
a)for the wife to remove the caveat lodged by her over the Property A property;
b)equalising the parties’ respective superannuation entitlements as agreed; and
c)for each party to otherwise retain their respective motor vehicles, furniture and other personal effects including monies held in their own bank accounts.
For the reasons set out above, I am satisfied that orders in these terms represent a just and equitable adjustment of the property of the parties to the marriage or either of them.
I certify that the preceding one hundred and forty-three (143) paragraphs are a true copy of the reasons for judgment of Judge Mercuri
Date: 25 May 2018
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Tax Law
Legal Concepts
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Costs
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Remedies
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Statutory Construction
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Jurisdiction
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