Jarrow & Manard
[2021] FedCFamC2F 268
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)Jarrow & Manard [2021] FedCFamC2F 268
File number(s): PAC 2593 of 2019 Judgment of: JUDGE OBRADOVIC Date of judgment: 29 October 2021 Catchwords: FAMILY LAW – property – de facto relationship – adjustment of property interests – findings of credit –assessment of contributions – just and equitable. Legislation: Family Law Act 1975 (Cth) ss 90SF, 90SM, 90RD. Cases cited: Bevan & Bevan [2014] FamCAFC 19
Chapman & Chapman [2014] FamCAFC 91
Kowaliw & Kowaliw [1981] FamCA 70
Oamra & Williams [2021] FamCAFC 117
Norbis v Norbis [1986] HCA 17
Peters & Walker [2015] FamCA 732
Russell & Russell (1999) FLC 92-877
Scott & Danton [2014] FamCAFC 203
Stanford v Stanford [2012] HCA 52
Teal & Teal [2010] FamCAFC 120
Trevi & Trevi [2018] FamCAFC 173Weir & Weir [1992] FamCA 69
Division: Division 2 Family Law Date of last submission/s: 24 March 2021 Date of hearing: 25 September 2020 and 29 January 2021 Place: Parramatta Number of paragraphs: 90 Counsel for the Applicant: Mr Fowler Solicitor for the Applicant: Bell Lawyers Counsel for the Respondent: Ms Cotter-Moroz Solicitor for the Respondent: Pannu Lawyers ORDERS
PAC 2593 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2) BETWEEN: MS JARROW
Applicant
AND: MR MANARD
Respondent
ORDER MADE BY:
JUDGE OBRADOVIC
DATE OF ORDER:
29 OCTOBER 2021
THE COURT ORDERS THAT:
1.Within 42 days, the Respondent, Mr Manard, shall pay to the Applicant, Ms Jarrow:
(a)the sum amount of $141,462; and
(b)the sum amount of $12,500, being the costs which remain unpaid pursuant to orders made on 12 June 2020.
(collectively referred to as “the Sum”)
2.In the event that the Respondent does not pay to the Applicant the whole of the Sum contained in Order 1 herein within 42 days, then the Respondent shall, within 42 days thereafter, do all acts and things and sign all documents necessary to offer the property situate at and known as B Street, Suburb C, NSW, being the whole of the land contained in Folio Identifier Certificate of Title … (“the B Street, Suburb C property”) for sale by auction and to give effect to the sale the Respondent shall:
(a)Place the property with an agent as agreed by both parties and failing agreement as shall be appointed by the President of the Real Estate Institute of New South Wales.
(b)Execute all documents required by the agent for the sale of the property.
(c)Request the agent to recommend a reserve price be placed on the property.
(d)Agree with the Applicant (via her solicitor) on the reserve price, and if the parties cannot agree, then the listing price or reserve price shall be set by the nominee of the President of the Real Estate Institute of New South Wales.
(e)Pay to the agent any sums which are requested for advertising expenses in relation to the sale of the property.
(f)Attend at the auction and negotiate with the highest bidder if the reserve price is not reached and accept the advice of the agent as to the acceptance of a price less than the reserve price but in any event, shall accept a price that is not less than 90% of the reserve price.
(g)Co-operate with the agent in relation to the auction including making keys available, allowing inspection of the property at times requested by the agents and ensuring that the property is in a neat and tidy condition at the time of inspection by prospective purchasers.
(h)Execute all documents (including a Contract of Sale) necessary to complete the sale.
3.The parties shall appoint a solicitor to have the primary conduct of the sale on behalf of both parties, and failing agreement, the Applicant shall propose the names of three solicitors and the Respondent shall choose one, and any costs properly payable to that solicitor shall be and form part of the legal costs of sale and be deducted from the proceeds as provided herein.
4.The Respondent shall not confer on any agent any right to any sole or exclusive agency in respect of the property or to any commission without the written consent of the Applicant (via her solicitor) and any such appointment shall be of no effect.
5.Upon the sale of the property, the proceeds of sale shall be paid in the following manner and with the following priority:
(a)All costs and expenses of sale including legal costs and disbursements, agents commission, valuation costs, and auction expenses.
(b)The amounts required to pay all municipal and water rates outstanding with respect to the property.
(c)In payment to the Applicant as follows:
(i)The entirety of the Sum, if the sale price is $500,000 or less; or
(ii)The entirety of the Sum plus 67% of the difference between the sale price and the amount of $500,000, if the sale price is more than $500,000.
(d)In payment to the Respondent of any remaining balance.
6.Pending the sale of the property:
(a)The Respondent shall have the sole right to occupy the property and during such right of occupation the Respondent shall be responsible for all rates and outgoings of the property as they fall due up to and including the settlement date.
(b)The Sum shall be a charge upon the Respondent’s interest in the property and the Applicant shall be entitled to record the charge created by this Order and this Order itself as against title to the property.
(c)The Respondent be restrained from selling, transferring, mortgaging or in any way further encumbering or otherwise dealing with the property and specifically shall not drawdown any further monies, nor incur any further indebtedness (including without limitation under any credit card facility), secured by the property without the prior written consent of the Applicant (via her solicitor), or by leave of the Court.
7.The Respondent do all acts and things necessary to consent to a caveat to be placed on the property by the Applicant within 7 days of a request to do so and the Applicant is hereby granted leave to file such caveat.
8.In the event that the net proceeds from the sale of the property is less than the Sum, then the Respondent shall pay to the Applicant (via her solicitor) the difference between the net proceeds of sale and the Sum (“the Shortfall”) within 21 days of the completion of the sale of the property and that:
(a)Interest shall accrue upon that sum or such portion of the Shortfall as remains outstanding from time to time at the rate prescribed by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
(b)The Shortfall may be registered as a judgement debt.
(c)The Applicant shall be entitled to commence proceedings to recover the Shortfall, and any interest accrued (as applicable), together with the costs of recovery in any Court of competent jurisdiction, if not otherwise paid within 42 days to the solicitors for the Applicant in accordance with these Orders.
(d)The affidavit of the Applicant’s solicitors certifying non-payment into their trust account of the Sum and/or the Shortfall in accordance with these Orders shall be sufficient to recover the debt due as a judgement debt.
9.In accordance with section 90XT(1)(b) of the Family Law Act 1975 (Cth):
(a)The Applicant (or the Applicant's administrators, executors, beneficiaries, heirs or assigns) is entitled to be paid the specified percentage out of the Respondent’s interest in the U Superannuation Fund;
(b)The Respondent’s entitlement (or the entitlement of such other person to whom a payment may be made out of the Respondent’s interest) in the U Super Fund, is correspondingly reduced by force of this Order;
(c)The percentage specified for the purposes of this Order is 20%;
(d)The trustee of the U Super Fund do all such acts and things and sign all such documents as may be necessary to:
(i)calculate, in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001 the entitlement awarded to the Respondent in the immediately preceding clause of this Order; and
(ii)pay the entitlement whenever the trustee makes a splittable payment from the Respondent’s interest in the U Super Fund.
10.This Order has effect from the operative time and the operative time is 4 days after the date of service of this Order upon the trustee.
11.As between the Applicant and Respondent, and subject to these Orders, the parties shall each respectively retain all interest in and entitlement to:
(a)All personal property now in his/her respective ownership, possession or control;
(b)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively;
(c)All interests in life insurance policies and superannuation funds standing in his/her sole name respectively;
(d)All interests in any business to which either party has an interest in; and
(e)All other property and/or financial resources now or in the future.
12.Except as specifically provided by all these Orders to the contrary, the Respondent hereby indemnifies the Applicant from and in respect of all actions, claims, suits and demands as may be made against the Applicant in relation to all liabilities in the name of the Respondent.
13.Except as specifically provided by all these Orders to the contrary, the Applicant hereby indemnifies the Respondent from and in respect of all actions, claims, suits and demands as may be made against the Respondent in relation to all liabilities in the name of the Applicant.
14.Except as specifically provided for by any Order comprised in these Orders to the contrary, each of the Applicant and Respondent shall release the other from all debts owing from one to the other.
15.Both parties do all acts and things and execute all documents, authorities and writings as are necessary to give effect to all or any of these orders.
16.In the event that either party refuses or neglects to execute any Deed, document or instrument necessary to give effect to these Orders, the Registrar of the Court being appointed pursuant to section 106A of the Family Law Act 1975 (Cth) shall execute such Deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the Deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of Affidavit.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Jarrow & Manard has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE OBRADOVIC:
Introduction
These are reasons for judgment in respect of competing applications for an adjustment of property interests under s.90SM of the Family Law Act 1975 (Cth) (“the Act”) as between the applicant, Ms Jarrow, and the respondent, Mr Manard, following the breakdown of their de facto relationship.
Procedural History
The proceedings were commenced on the applicant’s Initiating Application filed on 4 June 2019. On 11 and 12 June 2020, this Court, albeit a different judge, heard an application pursuant to s.90RD of the Act for a declaration of the existence of a de facto relationship. Ex tempore reasons for judgment were delivered on 12 June 2020, declaring that the parties lived in a de facto relationship commencing in approximately August 2003 and concluding on 10 June 2017: Harrow & Manard [2020] FCCA 2598 (“Harrow”). The Court also made asset preservation orders in respect of the former matrimonial home, namely the property situate at and known as B Street, Suburb C (“the B Street, Suburb C property”). Additionally, a costs order was also made against the respondent fixed in the sum of $25,000 to be paid to the applicant within 42 days of the date of those Orders.
The final hearing of this matter proceeded on 25 September 2020 and 29 January 2021, with written submissions to be filed in accordance with orders dated 29 January 2021, following which the Court reserved its decision.
Competing Claims
The applicant sought an order that the respondent pay her the sum of $148,000 or equivalent to between 55% to 57.5% of the net asset pool (after add backs), and in default thereof that the B Street, Suburb C property be listed for sale and that she receive such payment from the net proceeds of sale. Further, the applicant, in addition to costs incidental to this application, seeks orders for the payment of $12,500, being the costs which remain unpaid to the applicant by the respondent pursuant to orders made by this Court on 12 June 2020, and that she be entitled to be paid 20% of the respondent’s superannuation interests (being approximately $22,000).
The respondent, on the other hand, whilst conceding that it would be just and equitable to make orders altering the parties’ property interests, seeks orders that he pay the applicant the sum of $40,000 and transfer the sum of $13,147 to the applicant from his superannuation interests. Save for the costs ordered on 12 June 2020, the respondent further seeks that each party pay their own costs.
There was significant focus at hearing, understandably and appropriately so, on a not insubstantial number of post separation transactions undertaken by the respondent. These transactions amounted to a total of over $300,000. The applicant was required, due to the respondent’s lack of proper explanation and full and frank disclosure, to trawl through over 600 pages of financial documents in order to ascertain the respondent’s post separation spending and use of funds. The detailed forensic work undertaken by and on behalf of the applicant in this regard, no doubt came at a significant cost, both in terms of the time required and also in terms of legal costs and disbursements.
Legal Principles
The overall approach to the determination of an application for property adjustment orders was set out by the High Court in Stanford v Stanford [2012] HCA 52 (see in particular [37] to [42]). The High Court recorded three fundamental propositions. The first was the need to identify existing legal and equitable interests; the second was that those interests can only be altered by a principled application of judicial discretion; and the third was that, the requirement that the court must not make any order, unless it is satisfied that in all of the circumstances it is just and equitable to make the order, requires separate consideration and should not be conflated with the statutory considerations required to be taken into consideration as to what order, if any, should be made (Oamra & Williams [2021] FamCAFC 117 at [35]).
Such approach was subsequently considered by the Full Court of the Family Court in Bevan & Bevan [2014] FamCAFC 19 (“Bevan”), Chapman & Chapman [2014] FamCAFC 91 and Scott & Danton [2014] FamCAFC 203. Such an approach is also applicable to proceedings pursuant to the de facto relationships provisions of the Act, namely Part VIIIAB (see for example Peters & Walker [2015] FamCA 732).
As such, once the issue of whether it is just and equitable to make any order is resolved, the Court is to then consider the contributions made by the parties as defined in s.90SM(4)(a) to (c), the matters set out in s.90SM(4)(d) to (g) and in particular the subjective considerations as to the parties by having regard to the provisions of s.90SF(3) in so far as they are relevant.
The Court is then to consider the justice and equity of the actual orders to be made, in the context of the Court’s obligations to make appropriate orders as provided for in s.90SM(1) of the Act (see generally Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120, but in the context of s.79).
The just and equitable requirement is “one permeating the entire process” (Bevan at [86]).
The Court is not limited in its exercise of discretion to the parties’ respective applications and it is not bound by the orders sought. Ultimately any order which the Court makes must not only be just and equitable, but it must be made in the proper exercise of the Court’s discretion.
Add-Backs
In Trevi & Trevi [2018] FamCAFC 173 (“Trevi”) at [27] – [30] the Full Court of the Family Court held as follows:
27. The Full Court held in Omacini and Omacini that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or want on, negligent, or reckless dissipation of assets.
28. However, the Full Court also made it clear that an addback does not necessarily occur whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”, the Full Court describing such a proposition as “unduly simplistic”. An earlier Full Court made the same point, saying that adding back is “the exception rather than the rule”.
29. The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, “the Family Court must take the property of a party to the marriage as it finds it” at trial. An important parallel proposition is that the parties do not “go into a state of suspended economic animation” after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
30. Two fundamental premises emerge from Omacini and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.
(citations omitted)
Relevant Facts
The applicant was born in 1975. She is 46 years old.
The respondent was born in 1979. He is 42 years old.
The parties met in 2002 and commenced cohabitation in 2003. The parties lived together continuously until they separated on 10 June 2017, save for a brief separation period in 2009 (see Harrow at [142]).
The parties lived in a number of rental properties in Greater Western Sydney for the first nine years of their relationship. In 2013, the parties moved into B Street, Suburb C property which was purchased and registered solely in the respondent’s name.
The parties have two children together; M born in 2005 and J born in 2007.
The parties have never held a bank account in joint names.
Contributions at the Commencement of Relationship
At the commencement of the relationship the parties had minimal assets. The applicant had a car worth approximately $1000 and minimal savings. The respondent also had a car, minimal savings and a $3000 debt in unpaid driving fines.
The respondent worked as a labourer earning around $500 per week. The applicant worked four days a week as a carer earing around $400 per week.
The applicant deposes that initially the parties pooled their earning for rent, utilities, groceries and nights out together but maintained separate bank accounts.
Contributions During the Parties’ Relationship
The respondent contends that throughout the relationship he paid the household expenses including groceries, utilities, rent, and later mortgage payments and rates for the B Street, Suburb C property. He explained that the applicant would use his key card to pay household expenses such as groceries.
The applicant ceased paid employment sometime in 2005 after she fell pregnant and assumed the role of homemaker. As homemaker, the applicant took on most of the caring responsibilities as well as cooking and cleaning. The applicant concedes that the respondent occasionally helped with bathing and changing nappies as well as with gardening, home maintenance and vacuuming.
In 2007, the respondent was in a motorcycle accident which resulted in a month long stay in hospital followed by a 6 month recovery period at home. The applicant assumed all homemaker duties and cared for the respondent and the children during this period.
Between 2006 and 2012, the applicant commenced and completed her tertiary studies to become an educator. She graduated with a Bachelor Degree in 2013 and a Masters in 2014.
During the applicant’s studies she was in receipt of Centrelink benefits, which according to her evidence this was used to pay the parties’ rent. The applicant provided money directly to the respondent by withdrawing cash from her account and depositing it into his account.
The respondent submits that he contributed to the welfare of the family during this time, by supporting the applicant to complete her tertiary studies, who emerged from the relationship with an occupation which will provide her with a secure and stable income in the future.
The following were findings made in Harrow:
During cross-examination, Mr Manard conceded that Ms Jarrow bought groceries and met the children’s expenses. [162]
I accept Ms Jarrow’s evidence that during that period, and thus, by reference to the earlier periods, consistently also then, that she was providing money directly to Mr Manard by depositing money into his account. In addition, she was, notwithstanding the assertion across all three affidavits affirmed by Mr Manard, purchasing groceries and meeting the children’s expenses, as led by him in his cross-examination. It does Mr Manard’s credit no good. It does Ms Jarrow’s credit a world of good. [168]
Ms Jarrow used that money (Centrelink) to meet grocery and other expenses within the household. [208]
The applicant recommenced paid employment as a casual educator in mid-2014 earning an annual salary of $80,000. The applicant would transfer half her wage in cash to the respondent (approximately $950 a fortnight) to cover the cost of the mortgage and bills. The balance of her income was used for groceries and care of the children.
The applicant purports that the division of labour around the home did not change much despite both parties undertaking paid employment. The maternal grandfather assisted the applicant with the school drop off and pick up.
In 2016 the respondent started V Pty Ltd. The respondent has worked as a sole trader. The applicant was a guarantor for a business loan of $66,250.00. She also contributed with some of the company branding, bookkeeping and undertook an industry course.
The B Street, Suburb C Property
The B Street, Suburb C property was shared by each of the parties for their mutual use and benefit and the benefit of their children from June 2013 to 10 June 2017.
The applicant contends that the B Street, Suburb C property was a jointly purchased asset and should be part of the asset pool. The respondent contends that he purchased the property without any financial contribution from the applicant.
It is applicant’s evidence that she contributed $8,000 which was gifted to her from her parents in lieu of contributing to her wedding. She is unable to distinctly recall whether the money was deposited into the respondent’s account or his mother’s account. The respondent contends that it is implausible that the applicant would not recall how she deposited the $8,000.
As noted by the Court in Harrow at [182] the $18,000 received from the respondent’s mother was deposited into his account on the same day that the applicant received a payment of $8,000 from her parents.
Contributions Post Separation
Post-separation, the respondent has continued to live in the property and continues to meet all the mortgage repayments, outgoings and insurances on the property.
The applicant contends that following the relationship breakdown she has taken on 100% of the care of the children.
The children spend time with their father in accordance with their wishes. The respondent spends time with J most weekends which often includes overnight time. The respondent spends less time with M, approximately 1-2 times a month and this rarely includes overnight time. The applicant is content with this arrangement. The Court has not been asked to make orders in regards to parenting.
The children presently attend a private catholic school where the school fees for both children are approximately $7,200 per year and up until 2020 was paid for by the respondent. According to the respondent this arrangement was in accordance with an informal child support agreement. In August 2020, the applicant was contacted by the children’s school and was told that the fees for 2020 remain outstanding.
The applicant states that she pays for most of the children’s extra-curricular activities which costs approximately $500 to $1,000 per child each year. The respondent pays for J’s soccer. She also covers the children’s medical bills, including M’s visits to the psychologist which occur every three weeks and cost $180 and J’s braces which she pays for in fortnightly instalments of $100 over the course of three years.
The applicant annexes to her affidavit sworn 28 August 2020 an email dated 8 November 2019 from Mr W of X School to the applicant explaining that the father contacted the school and requested that he not be contacted regarding the daily academic management of his children.
In her financial statement filed 2 September 2020, the applicant discloses that she has a full-time educator position and earns a yearly salary of approximately $92,500. She rents a home with her sister and their children for which she pays $615 per fortnight. She also has personal expenditure totalling $450 per fortnight. The applicant states that she cannot afford to live independently.
VALUE OF THE ASSET POOL AND DETERMINATION OF CONTRIBUTIONS
In Stanford, the High Court emphasised as fundamental that a consideration of whether it is just and equitable to make a property settlement order begins by “identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property” (Trevi at [46]).
What Liabilities are to be included in the Pool?
The parties are in dispute as to whether a number of liabilities should be included on the balance sheet.
The applicant is indebted to Ms Jarrow for funds lent to her on account of legal fees. This amount will not be included in the balance sheet. For similar reasons, the respondent’s debt to Ms G will not be included in the balance sheet.
The applicant has identified liabilities, which she submits should not be included in the pool as they are liabilities which were incurred in the company name, following separation, and without consultation of the applicant. In his written submissions the respondent agrees that the below listed items should not be included in the pool:
Liabilities
Owner
Value
Trailer
V Pty Ltd
$113,825.40
Motor Vehicle 1
V Pty Ltd
$57,788.01
Finance Company Commercial Loan
V Pty Ltd
$14,000
Total
$185,613.41
By virtue of the same reasoning, the assets which are assets of V Pty Ltd will not be included in the pool as stand-alone assets, but rather as part of the value assigned to the company.
The parties agree that the outstanding amount of costs payable by the respondent to the applicant pursuant to orders made on 12 June 2020 is not to be included in the pool. An order requiring the respondent to pay this amount is also proposed by each of the parties.
Add-backs?
The applicant has identified the following sums as moneys prematurely disposed of and unaccounted for into the property pool to satisfy the applicant’s claim:
Addbacks
Owner
Value
Redraw from ANZ home loan
Respondent
$45,176.00
Various deposit transactions in the respondent’s disclosure material including insurance pay outs – summaries in the s.50 EA summary
Respondent
$262,578.00
Superannuation withdrawal
Respondent
$10,000.00
Sale proceeds of Motor Vehicle 2
Respondent
$6,7000.00
Total
$324, 453.00
There is no issue that the respondent drew down $45,176 from the home loan secured against the B Street, Suburb C property in June 2019, when he refinanced the previous home loan and borrowed an additional amount over the then existing home loan debt. This increased the debt secured over the B Street, Suburb C property to $364,000. The respondent gave evidence that he spent this money on entertainment, gambling and shopping. In all of the circumstances, these were not reasonable living costs of the respondent, notwithstanding the submissions made on his behalf in this regard.
At the time his earnings were more than sufficient to cover his living expenses, noting the representations he made to the lender at the time that the loan was approved. While the Court notes the respondent’s evidence that the amount was something that was simply put there by his loan broker, he is the person who signed the application and declared as to the truth of his financial position at the time. If he was dishonest at the time he declared his financial position to the lender, he cannot now benefit by virtue of that deception and dishonesty.
The amount of $262,578 is made up of various amounts spent by the respondent during the period July 2017 to May 2020. There was little to no explanation provided in the respondent’s evidence in chief about such spending. The respondent was asked questions about the details of his spending and by and large the moneys were spent on gambling, legal fees, repairs to the Prime Mover and the purchase of a Motor Vehicle 2:
a. The Motor Vehicle 2 was purchased a short time after separation, and it is likely that the moneys for its purchase came from pre-separation funds. That motor vehicle was later written off by the insurer and the respondent received an insurance payment of $49,650 for the car;
b. The Prime Mover is an asset of V Pty Ltd, and any repairs to the truck were liabilities of the company not the respondent. If he paid for the repairs, then the company is liable to him for the costs of those repairs. The truck was purchased during the relationship and it was written off post separation, with the respondent receiving an insurance payment of $41,950 in 2020;
c. Gambling and other alleged ordinary expenses were in the circumstances excessive and unreasonable; and
d. The legal fees paid by the respondent from moneys which can be traced back to funds or assets held by the parties pre-separation ought to properly be added back to the pool. The difficulty here is that the respondent’s evidence is most unsatisfactory as to the source of funds for the payment of his legal fees, and the Court is not able to make particular findings about such funds.
In respect of the rest of the moneys forming the balance of the $262,578, some of those moneys came from an insurance payout for a work injury suffered in 2015 and 2016, prior to the parties’ separation.
There appears to be significant intermingling of payments associated with V Pty Ltd and other payments which were made by the respondent personally, such as gambling and legal fees. There is an apparent repayment and overpayment of a loan to the respondent’s current partner.
The Motor Vehicle 2, after it was written off, was sold by the respondent to his partner for $6,700 and those funds have all dissipated.
The respondent has also drawn down on his superannuation during the COVID-19 pandemic in the amount permitted by the Federal Government at the time as an early release payment. Such payments were only available in certain circumstances, to support people whose finances were adversely impacted by COVID-19. The respondent did not disclose the withdrawal of the $10,000 from his superannuation until cross-examination.
The Court finds that the amounts identified above were utilised by the respondent post separation without any recourse or accounting to the applicant, and that the respondent has not been fully frank about such spending. Furthermore, even with requests for particular documents to be disclosed, the respondent has been recalcitrant in respect of his obligations for full and frank disclosure. In such circumstances, the Court will not be overly cautious about making findings in favour of the innocent party (Weir & Weir [1992] FamCA 69).
While the Court is aware of the authorities such as Kowaliw & Kowaliw [1981] FamCA 70 and that it is not normally appropriate years after separation to require each of the parties to account for monies spent after separation so as to determine whether such expenditure was reasonably necessary, and if it was not, to determine whether it would be proper to add it back into the pool, in the circumstances of this case it is more appropriate that the respondent’s post-separation spending be considered in light of s.90SF(3) factors, and in particular pursuant to s.90SF(3)(r).
The Pool
At the time of final hearing, the existing legal and equitable interests of the parties in property are as follows:
Asset
Owner
Value
Credit Union Account
Applicant
$1,315
Motor Vehicle 3
Applicant
$12,000
Household Contents
Applicant
$1,000
Super Fund Y
Applicant
$32,158
Credit Union Car Loan Loans
Applicant
($13,272)
Credit Union Personal Loan
Applicant
($27,866)
HELP Loan (HECS)
Applicant
($9,900)
B Street, Suburb C
Respondent
$500,000
Commonwealth Bank Australia Account
Respondent
$6,046
Motor Vehicle 4
Respondent
$42,000
V Pty Ltd
Respondent
$0
Household Content
Respondent
$3,000
ANZ Progress Saver
Respondent
$2,080
U Super Fund
Respondent
$65,735
Mortgage with ANZ secured by B Street, Suburb C Property
Respondent
($355,761)
Motor Vehicle 4 Car Loan
Respondent
($34,588)
Total
$223,947
Assessment of Contributions
The parties were in a relationship of almost 14 years, during which time they had two children together. M, who is now 16 years old and J who is 14 years old. Since the parties separated in June 2017, the children have lived with the applicant and she has been their primary carer.
At the commencement of the parties’ relationship, they both worked for a modest wage, and after the birth of their first child the applicant took on the role of homemaker and parent. The applicant made significant and substantial contributions as homemaker and also made indirect contributions in facilitating the respondent’s business and business undertakings and the parties’ progression to home ownership.
The respondent took on the role of primary breadwinner, and during periods of time when the applicant was not earning any income he was the sole income earner. In 2010, the respondent received an inheritance. The amount of the inheritance and how it was spent was the subject of some evidence in the respondent’s case, but like much of his evidence it was not particularly enlightening.
During the parties’ relationship, the applicant undertook tertiary studies to become an educator, completing those studies with a Master’s Degree in 2014. She arranged her studies around the care of the children and her other homemaker responsibilities. The respondent worked and supported the family financially during this period. The applicant has a HECS debt consequent upon her studies. After she completed her tertiary studies, the applicant was employed on a casual basis in 2014, but from 2015 she has held a permanent position.
After the respondent’s motorcycle accident, the applicant cared for and supported the respondent.
The respondent has worked in various roles during the parties’ relationship, as a labourer, factory worker and then self-employed in the transport business operating through V Pty Ltd. The applicant assisted with the establishment of V Pty Ltd, including by taking out a joint loan.
While the former matrimonial home was purchased in the respondent’s sole name, there was financial contributions made by each of the parties towards the purchase, including from joint savings and made on their behalf by their parents. In the context of the myriad of other contributions over the 14 years of cohabitation, the precise financial contributions towards the purchase price of the B Street, Suburb C property is not a matter of any particular or significant weight.
Post separation, the applicant has made and continues to make the overwhelming contribution to the care and welfare of the parties’ children. The respondent has made some financial contributions towards their care and maintenance and has spent limited time with the children.
The respondent on the other hand, while remaining in the B Street, Suburb C property, has made all of the financial and non-financial contributions in respect of that property but by the same token he has had a significant benefit of living there while the applicant has had to find suitable accommodation for herself and the children.
Both parties submit that the Court should take a global approach to the assessment of contributions, and there is an agreement that the parties’ contributions were broadly equivalent, although each argues that his/her contribution was slightly greater than the other’s.
Given the length of the relationship, the parties’ contributions according to their respective roles and abilities, a holistic or global approach is in all of the circumstances appropriate: Norbis v Norbis [1986] HCA 17 (at [16] per Mason Deanne JJ).
Overall, the contributions are assessed as slightly favouring the applicant, in large due to her overwhelming post separation contributions towards the care of the parties’ children. On a holistic assessment, the contributions of the parties are assessed at 55% to the applicant and 45% to the respondent.
Section 90SF(3) Considerations
The parties are of similar ages, although the applicant is slightly older than the respondent. The respondent submits that the injuries he suffered to his knees and hips adversely affect his capacity to drive for lengthy periods of time and thus adversely affect his earning capacity. There is no probative evidence to support such a submission, and the respondent’s taxable income does not reflect any diminishment in earnings which might have been expected as a result of a diminished capacity to work.
The applicant has a taxable income which since 2017 to 2020 has been in sum total higher than the respondent’s taxable income. The applicant is in stable and secure employment, and there is every likelihood that she will continue to earn an income until her retirement. This will also mean that her superannuation will grow due to compulsory employer contributions.
The respondent has retained the business and the company and he is the sole director and share-holder of the company. In the circumstances of this case he has control over its business operation and its assets, and he is able to benefit from the corporate structure. The company is his alter-ego and the respondent is able to and does, structure the company’s business and taxation affairs in a way that benefits him personally.
The applicant will continue to have the majority care of the parties’ children, and she will continue to be financially responsible for them. The respondent is likely to also make financial contributions towards the children, in a manner similar to what he has done in the past.
Post separation, the respondent has spent over $300,000. Such amounts cannot be and have not been explained by his taxable earnings. They were of a significant benefit to the respondent. While some of the payments received by the respondent during the relevant period are unlikely to be reproduced such that the Court would not be able to infer that the respondent will have similar benefits into the future, the money spent by the respondent during the post separation period to date of final hearing is nonetheless a relevant consideration pursuant to s.90SF(3)(r) as is the respondent’s lack of disclosure about such matters, as noted earlier in these Reasons.
In all of the circumstances, and once again taking a holistic approach in line with authorities such as Chapman (at [39]), there is to be a further adjustment in the applicant’s favour by virtue of s.90SF(3) factors of 12%.
Overall Adjustment
Based on the findings made as to contributions and further adjustment, the Court has assessed that there should be a 67% adjustment in favour of the applicant and a 33% adjustment in favour of the respondent. That is, the applicant is to receive assets to the value of $150,044 and the respondent $73,903.
Both parties seek a superannuation splitting order. The order sought by the applicant is in all of the circumstances, just and equitable and it is an order in respect of which the relevant superannuation trustee has been provided with procedural fairness.
As such, the applicant takes:
Asset
Owner
Value
Credit Union Account
Applicant
$1,315
Motor Vehicle 3
Applicant
$12,000
Household Contents
Applicant
$1,000
Super Fund Y
Applicant
$32,158
Credit Union Car Loan
Applicant
($13,272)
Credit Union Personal Loan
Applicant
($27,866)
HELP Loan (HECS)
Applicant
($9,900)
Payment from Respondent
$141,462
Superannuation Splitting Order as to 20%
$13,147
Total:
$150,044
As such, the respondent takes:
B Street, Suburb C
Respondent
$500,000
Commonwealth Bank Australia Account
Respondent
$6,046
Motor Vehicle 4
Respondent
$42,000
V Pty Ltd
Respondent
$0
Household Content
Respondent
$3,000
ANZ Progress Saver
Respondent
$2,080
U Super Fund
Respondent
$65,735
Mortgage with ANZ secured by B Street, Suburb C Property
Respondent
($355,761)
Motor Vehicle 4 Car Loan
Respondent
($34,588)
Payment to applicant
($141,462)
Superannuation splitting order 20%
($13,147)
Total:
$73,903
The parties each propose that the respondent retain the B Street, Suburb C property but that he pay the applicant a cash adjustment. This is what the orders will provide for at first instance. In all of the circumstances, such an outcome is just and equitable. It will allow the applicant the benefit of a cash adjustment while allowing the respondent the benefit of retaining the property.
However, if the respondent is not able to make such payment within 42 days the property will be sold and the applicant will then be paid out from the proceeds of sale. There is currently $144,239 equity in the property, based on the agreed value at final hearing. The payment to the applicant is roughly 98% of that equity.
If the property is to be sold, the minimum payment to the applicant will be $141,462. If the property is sold for an amount greater than $500,000 the applicant will be paid $141,462 plus an additional 67% of the difference between the sale price and $500,000. If the property is sold for less than the agreed value (which is unlikely) then the applicant will still take $141,462 or if net proceeds are less, the entirety of the net proceeds and the shortfall will remain payable by the respondent. In all of the circumstances, it is just and equitable that the applicant receive the benefit of the adjustments made pursuant to these orders.
Each of the parties will retain superannuation and given their ages and earning capacities, such superannuation will likely continue to accrue until the parties reach retirement.
In all of the circumstances, the result is just and equitable.
Costs
The applicant moves the Court for an order that the respondent pay her costs of these proceedings. Neither party has made submissions to the Court as to why a costs order should or should not be made, nor have the parties addressed the Court as to quantum.
The parties have 28 days from the date of the orders to apply to the Court for a costs order pursuant to Rule 12.13 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth). If costs are pressed, it may be appropriate for such an application to be dealt with on the papers.
For all of those reasons, orders as set out at the forefront of these Reasons for Judgment are made.
91 I certify that the preceding 90 (ninety) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Obradovic.
Associate:
Dated: 29 October 2021
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