Jennings and Branson
[2015] FCCA 91
•23 January 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| JENNINGS & BRANSON | [2015] FCCA 91 |
| Catchwords: FAMILY LAW – Orders seeking alteration of property interests – whether just and equitable to alter interests – what alteration is just and equitable. |
| Legislation: Family Law Act 1975, ss.79, 79(2), 79(4), 75(2), 79(a)(b) and (c), 79(4)(d)(e)(f) and (g) |
| Stanford v Stanford (2012) 247 CLR 108; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; (2012) 293 ALR 70; [2012] HCA 52 Pierce v Pierce [1998] FamCA 74 Mallet & Mallet (1984) FLC 91-507 C & C (2005) FLC 93-320 West & Green (1993) FLC 93-395 |
| Applicant: | MS JENNINGS |
| Respondent: | MR BRANSON |
| File Number: | MLC 4508 of 2014 |
| Judgment of: | Judge Jones |
| Hearing dates: | 1 & 2 December 2014 |
| Date of Last Submission: | 2 December 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 23 January 2015 |
REPRESENTATION
| Counsel for the Applicant: | Ms Smallwood |
| Solicitors for the Applicant: | Pearsons Lawyers Pty Ltd |
| Counsel for the Respondent: | Mr Dixon SC |
| Solicitors for the Respondent: | Lander & Rogers |
ORDERS
The wife retain all her right, title and interest in the real property situate at Property G (“Property G”) being the whole of the land more particularly described in Certificate of Title Volume (omitted) Folio (omitted).
The wife shall:
(a)Indemnify the husband in respect of the mortgage loan, (omitted) registered to the (omitted) Bank and shall forthwith commence paying all instalments due on said mortgage;
(b)The wife shall pay for and indemnify the husband with respect to all outgoings, municipal and water rates and levies in relation to the Property G property.
The following properties be placed on the market for public auction:
(a)Property W1 being the whole of the land more particularly described in Certificate of Title (omitted) Folio (omitted); and
(b)Property W2 being the whole of the land more particularly described in Certificate of Title (omitted) Folio (omitted); and
(c)Property A being the whole of the land more particularly described in Certificate of Title (omitted) Folio (omitted).
(“the real properties”).
That the real properties be sold by public auction in the following manner:
(a)The parties shall appoint a local real estate agent, being (omitted) Real Estate for each of the properties.
(b)The listing price for the sale of each of the properties shall be as agreed between the parties and failing agreement as recommended by the agent who shall have regard to any valuations obtained by the parties or otherwise determined by the President of the REIV;
(c)Neither party shall sign or enter into a contract of sale for any of the properties without the consent of the other party or that party’s legal personal representative or in the absence of consent, or an order of this Court;
(d)The parties shall cooperate in every way with the agent including (without limiting the generality of the foregoing):
(i)Making the key available to the agent;
(ii)Signing all documents requested by the agent;
(iii)Subject to agreement or determination as to terms, executing a contract of sale in the form prepared by solicitors or conveyancers having the conduct of the sale at the sale price;
(iv)Allowing inspection of each of the properties at all reasonable times as requested by the agent;
(v)Doing all necessary repairs or improvements as recommended by the agent;
(vi)Not doing or saying anything to hinder or prevent a sale being effected.
(e)On settlements of the sale of each of the real properties the proceeds of sale shall be distributed in the following manner and priority:
(i)All costs and agreed expenses of the sale including legal costs and disbursements, agent’s commission, advertising expenses and auction expenses;
(ii)An amount necessary to discharge the following mortgages encumbering the real properties:
(A)(omitted) registered to the (omitted) bank;
(B)(omitted) registered to the (omitted) Bank and subject to paragraph 5 herein;
(C)(omitted) registered to the (omitted) Bank;
(D)(omitted) registered to the (omitted) Bank.
(iii)To meet the assessed amount of any capital gains tax payable on the properties to which capital gains tax is due; and
(A)The husband and wife shall do all things necessary to lodge tax returns necessary for the assessment of any capital gains tax due as referred to above as soon as practicable;
(B)The husband shall execute the tax return(s) by 30 August following the financial year in which each property is sold;
(C)For the purposes of meeting the payment of assessed capital gains tax, the sum of $65,000 will be held by the solicitors for the Husband in an interest bearing account in the joint names of the parties to be applied to the payment upon it becoming due and payable with any surplus funds to be divided between the parties in accordance with the percentage division 53.5% to the wife and 46.5% to the Husband and any shortfall of funds necessary to meet the payment to be met by the parties in the same percentage.
(iv)To reimburse any party who paid for any necessary repairs/maintenance or improvements to prepare the real properties for sale provided that such costs were approved by the other party before the work was carried out.
(v)The balance remaining shall be distributed 53.5% to the Wife and 46.5% to the Husband.
(f)The parties may, on 1 day’s notice, seek to relist the matter if they seek further orders in respect of the sale of the real properties.
(g)Pending the sale of the real properties, the Husband shall pay or cause to be paid the mortgage repayments, rates, land tax, insurance, Body Corporate fees and all outgoings of whatsoever nature or kind pertaining to the properties as they fall due and he shall be solely entitled to the rental income from the real properties.
The Husband, within 14 days, do all such acts and things, make such payment and otherwise sign all such documents as may be necessary to procure the Wife’s release from any and all liability in respect of registered mortgage number (omitted) in favour of the (omitted) Bank and to remove any encumbrance securing the commercial line of credit thereon and further that he be solely liable for and indemnify the Wife in relation to any call upon the said line of credit.
The parties do all such things and sign all such documents as may be required to give effect to these orders including but not limited to the withdrawal of caveats numbered (omitted) and (omitted).
The wife do all things necessary to have the cheque from (omitted) in the sum of $7,555 reissued to the parties and the funds be distributed as follows:
(a)To reimburse the Husband for rent arrears in the sum of $1,560; and
(b)To pay the invoice from (omitted) in the sum of $5,995.
The parties otherwise share equally in the costs of preparing the property at Property A for sale in accordance with the recommendations of (omitted) and/or the agent, (omitted) Real Estate.
The Husband retain for his absolute benefit his right title and interest in:
(a)Branson Investments as Trustee of the (omitted) Investment Trust; and
(b)(business omitted) Pty Ltd as Trustee for the (omitted) Unit Trust trading as (omitted);
(c)(business omitted) Pty Ltd as Trustee for the (omitted) Unit Trust trading as (omitted);
and he be solely responsible for and indemnify the wife in relation to all creditors, borrowings and liabilities of whatsoever nature including to the Australian Commissioner of Taxation or the Australian Tax office, and, further, that the wife waive and relinquish all and any claim and/or entitlement she may have in relation to same whether past, present or future.
The husband, as sole Director of Branson Investments Pty Ltd, do all things necessary to transfer to the Wife, at the expense of the Wife, the VW motor vehicle (registration (omitted)) and she shall discharge the loan which loan is no more than $9,354.00 with (omitted) encumbering the vehicle. The Husband shall indemnify the wife for any other liability associated with the transfer of the VW motor vehicle.
Unless specified and save for the purposes of enforcing the payment of any moneys due under these Orders, each party retain their respective assets and liabilities including superannuation entitlements, personal bank accounts and credit cards.
IT IS NOTED that publication of this judgment under the pseudonym Jennings & Branson is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 4508 of 2014
| MS JENNINGS |
Applicant
And
| MR BRANSON |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Jennings (“the wife”) and Mr Branson (“the husband”) seeks orders altering their interests in the property of their marriage. The wife is 43 years of age and the husband is 42 years of age. Their relationship was 14 years in duration. For the reasons which I have set out below, it is clear that both parties conducted their relationship as a professional couple, jointly contributing to the acquisition of their homes, to the acquisition of the husband’s business and the acquisition of investment properties. The acquisition of their homes, the business and the investment properties reflected a common purpose which they gave effect to through their joint endeavour. The cessation of their relationship was decisive, they divided their joint savings account and chattels and the wife left their home to live with her mother.
The parties have narrowed the compass of the dispute which the Court must determine by jointly proposing the sale of the investment properties with the net proceeds of sale to be paid to each other in accordance with the Court’s overall decision as to what alteration is just and equitable and appropriate. They have adopted a common sense approach in treating credit card liabilities and other savings of the parties as de minimus. Neither party seek orders to split the superannuation benefit in their names. They have agreed on the valuations of the major assets, the husband’s business and the former matrimonial home, Property G.
The major issues in dispute are the contributions by the parties during the relationship and any adjustment which should be made having regard to their future needs, financial resources and commitments and how the former matrimonial home is to be treated in the final orders of the Court. This is because both the wife and husband wish to own and live in the former matrimonial home. The wife has maintained this position throughout the proceedings, whilst the husband maintains that if he cannot own and live in the property then it should be sold. There are of course other issues in dispute which I will shortly identify.
Documents relied on
The wife relied on the following documents:
a)her Initiating Application filed 26 May 2014;
b)her affidavit filed 11 November 2014;
c)her Financial Statement filed 11 November 2014
d)affidavit of Mr R filed 17 November 2014.
The wife tendered the following exhibits:
a)W1 – (omitted) Bank Term Deposit Renewal Notice,
b)W2 – Bundle of Documents relating to Will of Ms C
c)W3 – Statements from parties joint (omitted) Bank Account, 1 September 2013 to 30 September 2013;
d)W4 – Statement from parties joint (omitted) Bank Account, December 2012;
e)W5- (omitted) Bank correspondence dated 11 November 2014 re loan application approval;
f)W6 – Copy of photograph of parties;
g)W7 – (omitted) Joint Loan Account authority, 16 July 2010;
h)W8–Various (omitted) Bank Home loan statements and transaction summary
i)(omitted) Branson Investments Pty Ltd atf (omitted) Investments Trust, year ended 30 June 2012;
j)W10- Bundle of (omitted) Bank statements for account in husband’s name.
The husband relied on the following documents:
a)his affidavit filed 27 November 2014; and
b)his Financial Statement filed 27 November 2014.
The husband tendered the following exhibits:
a)H1- (omitted) valuation Certificates;
b)(omitted) Various Mortgage of Land, Certificate of Titles;
c)H3 - (omitted) Bank Home Loan Summary statements from account in husband’s name, December 2012;
d)H4 – Correspondence to husband in relation to Property H, Victoria, 29 August 2012;
e)H5 - Correspondence to husband in relation to Property H, Victoria, 16 July 2012.
Background
The factual background of the relationship can be summarised as follows:
a)the wife was born on (omitted) 1971 and the husband was born on (omitted) 1972. The wife is presently employed as an (occupation omitted) at (employer omitted) and earns an income of approximately $110,000 per annum. The husband is a self-employed (omitted) and through Branson Investments Pty Ltd, of which he is sole director and shareholder, as trustee for (omitted) Investment Trust, holds a 50% interest in (omitted) and (omitted) franchises. In the 2014 financial year the husband’s taxable income was $445,726;
b)the parties commenced living together in or about (omitted) 1999 and were married on (omitted) 2003. They separated on a final basis on 15 September 2013. There are no children of this relationship or prior relationships;
c)the parties jointly purchased a residential home in Property L (“the Property L property”) in approximately November 1999.;
d)the husband purchased Property W1 in June 2002 as an investment property. The property is encumbered by a mortgage with the (omitted) Bank. Both the wife and husband are nominated as borrowers for the loan (exhibit W8). The original amount of the joint loan to husband and wife was $195,000.00 (exhibit W7). The property was purchased with the Property L property as security. The property has been tenanted and rental income applied to loan repayments and outgoings;
e)the husband purchased Property A in November 2004 as an investment property. The property is subject to a mortgage loan with the (omitted) Bank, with both the wife and husband nominated as borrowers for the loan (exhibit W8). The original amount of the joint loan to husband and wife was $253,000.00 (exhibit W7). The property was purchased with the Property L property and Property W1 property as security. The property has been tenanted and rental income applied to loan repayments and outgoings, until April 2014;
f)in or around September 2008, Branson Investments Pty Ltd purchased a one third share in the (omitted) franchise at a price of $44,000. The property at Property W1 was used as security for the provision of a loan to purchase this share. A commercial line of credit from the (omitted) Bank with a limit of $220,000 was established for the (omitted) franchise. The property at Property W1 was security for this commercial facility. The husband and his present business partner, Mr C, purchased the third share, through their trustee companies, in or around March 2010 and are now joint owners of the (omitted) franchise;
g)the parties sold the Property L property in 2008. The mortgage over this property had been discharged by 2003. The parties rented for a period of time in the (omitted) area;
h)the husband purchased Property W2 in June 2010 as an investment property. The property is subject to a mortgage loan with the (omitted) Bank. A loan was taken out by the husband and wife for $371,400.00 (exhibit W7). The property was purchased with Property A and Property W1 as security. The property has been tenanted and rental income applied to loan repayments and outgoings;
i)Property G, (the former matrimonial home) was purchased in 2010. The net proceeds of sale from the sale of the Property L property (around $480,000.00) was applied to purchase Property G for a purchase price of around $1,317,000. The wife is the registered proprietor and a mortgage of $820,00.00 was taken out in the wife’s name (exhibit W5). The parties agree this was done for commercial advantage;
j)the (omitted) Bank commercial line of credit was subsequently secured over the former matrimonial home as well as the property at Property W1;
k)in or around late 2011/early 2012, Branson Investments Pty Ltd purchased a one third share in the (omitted) franchise at a price of $44,000. The property at Property W1 was used as security for the provision of a loan to purchase this share. The husband and Mr C, purchased the third share, through their trustee companies, in or around November 2013 and are now joint owners of the (omitted) franchise;
l)Branson Investments Pty Ltd also purchased a property in Property H which was sold in around June 2012, a property in Property T which was bought and sold within a 12 month period and units in Property E which were bought and sold within a 12 month period;
m)the parties separated on 15 September 2013. The wife moved out of the former matrimonial home and has resided with her mother since that date; and
n)the business has available to it a commercial line of credit in the amount of $250,000 which is secured over the Property W property and the former matrimonial home.
The legislation
Section 79 of the Family Law Act 1975 (“the Act”) gives the Court power to alter the interests of the parties to a marriage in the property of the parties to that marriage. Sub-section 79(2) of the Act 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.
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 interests of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The matters to be taken into account under s.75(2) of the Act are as follows:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party’s role as a parent; and
(m)if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
The approach to applications under s.79
In Stanford v Stanford (2012) 247 CLR 108; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; (2012) 293 ALR 70; [2012] HCA 52, the High Court explained the proper approach to an application under s.79 of the Act as follows:
“37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. … The question posed by s.79(2) is thus whether, having regard to those existing interests, the Court is satisfied that it is just and equitable to make a property settlement order. (emphasis added)
38.Second, although s.79 confers a broad power on a Court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. …(footnotes omitted)
39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s.79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”. The question presented by s.79 is whether those rights and interests should be altered. (emphasis added)(footnotes omitted)
40.Third, whether making a property settlement order is “just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s.79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable" only because of and by reference to various matters in s.79(4), without a separate consideration of s.79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act. (emphasis added)(footnotes omitted)
…
42.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).”
In Stanford, the critical fact was that the parties had not separated.
The wife had suffered a stroke and had moved into a nursing home, but the parties’ marriage was intact. It was the wife’s case guardian, a daughter from an earlier marriage, who sought the alteration of property interests.
The wife died while the judgment of the Full Court of the Family Court was reserved. Consequently, when the Full Court of the Family Court came to re-exercise the discretion, the wife had no future needs, but the husband did. The High Court noted at [47] that the Courts below had not adequately considered the consequences for the husband of the orders made, namely, that his home would have to be sold.
The High Court emphasised that the just and equitable requirement of s.79(2) of the Act is not necessarily satisfied merely by a consideration of the contributions of the parties as described in s.79(4) of the Act. However, in the usual case before this Court, where the parties have separated, the High Court acknowledged at [42] that the just and equitable requirement would be “readily satisfied”.
It seems now that the appropriate course of consideration is as follows:
a)to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties, or either of them, in property;
b)to ascertain at this point whether it is just and equitable to make any order between these parties altering their interests in the property;
c)the Court must identify and assess the contributions of the parties with reference to the factors in ss.79(4)(a), (b) and (c), and thereby determining their contribution based entitlements.
d)the Court is to identify and assess any relevant matters referred to in ss.79(4)(d), (e), (f) and (g), including those relevant matters in s.79(2), and then determine whether any further adjustment should be made after determination of the contribution based entitlements of the parties.
e)the Court should then finally consider the effect of its findings and assessments as to contributions in section 75(2) factors and the orders that it intends to flow from such findings, and consider “justice and equity” in all of those circumstances.
Importantly, the “just and equitable” considerations are not to be determined from and conflated with a simple mechanical determination of contributions and relevant s.75(2) factors. The justice and equity consideration is carried out within “all of the circumstances of the case”.
The parties proposals and case
The wife’s proposed orders are in summary:
a)a division of assets on 55/45% basis in the wife’s favour;
b)that the wife retain:
i)all of her right, title and interest in the real property situate at and known as Property G;
ii)the VW Volkswagen (omitted) motor vehicle (“the VW”) with the husband to do all such things and sign all documents required to transfer the VW into the wife’s name. The Wife to discharge the loan encumbering the vehicle of an amount no more than $9354. Otherwise, the husband shall indemnify the wife from any other liabilities associated with the transfer of the vehicle into the wife’s name;
iii)her superannuation benefits and entitlements;
c)the properties situate at Property W1, Property W2 and Property A be placed on the market for public auction to be conducted by a real estate agent, other than (omitted) Real Estate. The listing price shall be as agreed by the parties or by the agent. The parties to cooperate in preparation for sale including, sharing the costs of preparing the properties for sale. The net proceeds of sale to be applied to discharge the mortgages, the capital gains tax accruing from the sale and then in the proportion 55% to the wife and 45% to the husband. For the purpose of meeting the payment assessed capital gains tax, the husband is to execute his tax return for the year ending 2015 no later than August 2015 with an amount of no more than $25,000 to be held in trust from the wife’s share. Pending the sale of the properties the husband shall be liable for liabilities associated with the properties.
d)The husband retain for his absolute benefit his right title and interest in his businesses and trusts and indemnify the wife in relation to all liabilities associated with the businesses.
e)That within 14 days of the orders, the husband do all such acts and things, make such payments and otherwise sign all such documents as may be necessary to procure the wife’s release from any and all liability in respect registered mortgage number (omitted) in favour of the (omitted) Bank and to remove any encumbrance securing the commercial line of credit and further that the husband be solely liable for and indemnify the wife in relation to said line of credit.
f)there be an adjustment in cash amounts after taking into account the husband’s business interests and any funds held in his name to affect the division of assets sought.
The wife’s case is that the contributions of the parties were equal during the relationship because:
a)she brought a greater financial contribution into the relationship which enabled the parties to purchase their first home, she applied an inheritance and redundancy payments to reduce the debt over the home, she worked full-time during the course of the relationship other than short periods of time and her earnings were applied for the benefit of the parties;
b)the husband’s business being the (omitted) franchises, was established and expanded from their joint savings and because she provided security for the loans utilised to purchase and invest in those businesses. She maintains that the husband’s investments which he refers to as his real estate investment portfolio were not particularly good ones and their contribution to the asset pool was limited. These investments also derived from the parties joint savings and were enabled only because she provided security for those investments;
c)she also contributed by way of undertaking the home duties associated with the relationship.
The wife maintains that there is a significant disparity in the parties earnings which will endure into the future for which an adjustment of 5% should be made in her favour.
Her submission is that just and equitable alteration of their interests in the property of the relationship would be 55% in her favour and 45% to the husband.
The husband’s proposed orders are, in summary, that:
a)the wife do all such things and sign all such documents as may be required to transfer all her right, title and interest in the real property situate at and known as Property G and that the husband do all things necessary to discharge the registered mortgage over the property or, alternatively, this property be sold by public auction;
b)the properties situate at Property W1, Property W2 and Property A (and Property G, where that property is not transferred into his name) be placed on the market for public auction to be conducted by a real estate agent, being (omitted) Real Estate. The listing price shall be as agreed by the parties or by the agent. The parties to cooperate in preparation for sale including sharing the costs of preparing the properties for sale, The net proceeds of sale to be applied to discharge the mortgages, the capital gains tax accruing from the sale and then in the proportion 42.5% to the wife and 57.5% to the husband. For the purpose of meeting the assessed capital gains tax, the sum of $65,000 to be held by the solicitors for the husband in an interest-bearing account in the joint names of the parties to be applied to the payment on it becoming due with any surplus or shortage in funds divided as between the parties in accordance with the percentage division sought. Pending the sale of the properties the husband shall be liable for liabilities associated with the properties.
c)The husband shall do all acts and things, make such payments and otherwise sign such documents as may be necessary to procure the wife’s release from any and all liability in respect of the registered mortgage being the (omitted) Bank commercial line of credit and that he be solely liable for and indemnify the wife in relation to said line of credit.
d)Both parties do all such things and sign all such documents as may be necessary to give effect to these orders including but not limited to the withdrawal of Caveats.
e)The wife do all things necessary to have the cheque from (omitted) issued to the parties and the funds be distributed to reimburse the husband for rent arrears in the sum of $1560 and to pay the invoice from (omitted) in the sum of $5995.
f)The husband retain for his absolute benefit his right, title and interest in his businesses and that he indemnify the wife in relation to any liabilities associated with the business and the wife waive and relinquish any claim and/or entitlement she may have in relation to the same.
g)The husband transfer to the wife, at the expense the wife the VW motor vehicle and the parties do all things and sign all such documents as may be necessary to refinance the loan with (omitted) Finance encumbering the vehicle into the wife’s name and that she be solely responsible for and indemnify the husband in relation to same.
h)The parties, otherwise, retain their respective assets and liabilities including superannuation entitlements, personal bank accounts and credit cards.
The husband’s case is that his direct and indirect financial contributions, during the relationship were greater than the wife’s in that:
a)his earnings were greater than the wife’s and were applied to the benefit of the parties;
b)he was solely responsible for the accumulation of a real estate portfolio which presently comprise the asset pool and other real estate assets which were purchased and sold during the relationship and applied both to reduce debt over the former matrimonial home and other secured debt;
c)he made the overwhelming and only meaningful contribution to the acquisition, conservation or improvement of the (omitted) and (omitted) franchises, which has been valued at $565,000; and
d)the parties shared the domestic duties.
The husband submitted that both parties are in good health and work full time in their professional careers and the disparity in earnings between the husband and wife which presently applies may not endure in the future as the husband’s earnings will depend on fluctuations in the real estate market.
At the final hearing Mr Dixon SC, for the husband, submitted that looking at the contributions and taking into account future needs it was his view that an alteration of the interests of the parties in their property of 50% each was, in the circumstances, just and equitable.
The Parties’ Property and Liabilities
The wife asserts that the assets and liabilities available for distribution between the parties are as follows:
ASSETS
PROPERTY
OWNERSHIP
VALUE AT SEPARATION
Property G
Wife
E$1,4000,000
Property W1
Husband
E$375,000
Property W2
Husband
E$345,000
Property R
Husband
E$340,000
Branson Investments Pty Ltd (omitted) Investment Trust)
Husband
$564, 489
VW Volkswagen (omitted) motor vehicle
Branson Investments Pty Ltd
E$5,000 (net)
Porsche motor vehicle
Husband
Nil Equity
Bank accounts and savings in individual names at separation was $24,000, this sum divided between the parties
Joint
N/A
SUBTOTAL
E$3,029,489
LIABILITIES
PROPERTY
OWNERSHIP
VALUE
Mortgage over property at Property G
Joint
$864,000*
Mortgage over property at Property W1
Joint
$165,160
Mortgage over property at Property W2
Joint
$371,410
Mortgage over property at Property R
Joint
$253,000
Credit card debt was (omitted) Bank (at separation)
Wife
E $1,000
Credit card debt was (omitted) Bank
Husband
E $4000
Personal tax liability (2013 financial year)
Husband
$34,313**
SUBTOTAL
E$1,692,883
SUPERANNUATION
SUPERANNUATION FUND
Member
VALUE
(omitted) Fund superannuation
Wife
E $180,000
Husband
E $63,000
* At Trial the wife agreed the mortgage was $865,000
**At trial, the parties agreed that the tax liability was $32,500.
The husband asserts that at hearing the assets and liabilities available for distribution between the parties are as follows:
ASSETS
PROPERTY
OWNERSHIP
VALUE
Property G
Wife
To be sold*
Property W1
Husband
To be sold*
Property W2
Husband
To be sold*
Property R
Husband
To be sold*
Branson Investments Pty Ltd
Husband
$564, 489
VW (omitted) motor vehicle
Branson Investments Pty Ltd
E$10,646 (equity)
Porsche motor vehicle (purchased after separation)
E$170,000 less $211,500
Husband
($41,500)
Total Assets
$533,635 + sale proceeds
LIABILITIES
Mortgage encumbering Property G
Wife
E$865,000
Mortgage encumbering (omitted) properties
Husband
E$790,000
Unpaid tax liability
Husband
$32,500
CGT on sales of (omitted) properties
Husband
TBA**
Total liabilities
$1,687,500
NET POOL
($1,153,865)
SUPERANNUATION
Superannuation ((omitted)) applicant
E $180,000
Respondent superannuation
E $63,000
Total superannuation
$243,000
TOTAL NET POOL
($910,865)+ sale proceeds
* In the husband’s trial affidavit, he produced a table of assets and liabilities in which he concurred with the wife’s estimate of these properties. There has been no expert valuation of any of these properties.
** The parties agree that the capital gains tax on the sales of the (omitted) properties be paid jointly by the parties.
At trial, the parties informed the Court that they had agreed that, in the circumstances of the case, it was appropriate to adopt a two pool approach, by separating out the (omitted) properties. The parties agree that these properties should be sold with the net proceeds applied; first, to discharge mortgages encumbering the properties, next to discharge the capital gains tax accruing from the sales and then, each party be paid in accordance with the alteration in the parties’ interests which the Court determines is just and equitable. Although the parties agreed in their trial affidavits to estimated values of the (omitted) properties, the husband stated in evidence that the sale of those properties could secure higher values. I accept that, given the absence of expert valuations of these properties, the uncertainty attached to the sale of the (omitted) properties and the agreement of the parties to adopt a two pool approach, I should, in determining the assets and liabilities of the parties at hearing, set aside the (omitted) properties. I observe that, on the estimates of the value of the properties agreed to by the parties in their trial affidavits and taking into account the mortgages encumbering those properties, the equity in those properties is around likely around $270,430.00.
The parties also informed the Court that the balance in any bank accounts or credit cards in their names be treated as de minimis and excluded from the pool. I accept this approach as a common sense one.
There are two issues in dispute between the parties. The first is the value of the VW Volkswagen (omitted) motor vehicle which is owned by Branson Investment Pty Ltd and which has been used by the wife. The wife seeks, in her proposed orders, that the ownership of this vehicle be transferred to her. At hearing, Ms Smallwood on behalf of the wife, stated that the wife now proposed orders that she discharge the loan associated with the motor vehicle. The second issue in dispute is the husband’s proposed inclusion of a loss of $41,500 in respect of his purchase of a Porsche motor vehicle.
The (omitted) valuation for a (omitted) VW Volkswagen (omitted) in average condition is $21,760 at sale and $17,810 as a trade in (exhibit H1). The husband deposes that he estimates the vehicle to be worth $20,000.00 and that the outstanding amount of the loan encumbering the vehicle is $9,354. Consequently, I accept the estimate of the husband of the equity in the vehicle as $10,646.
The husband purchased a (omitted) Porsche (omitted) post separation which is subject to a loan of approximately $211,500. The (omitted) estimate for the private sale of this vehicle in good condition is $171,550. The husband conceded in evidence that, when he entered into leasing arrangements for the purchase of this vehicle, he was aware that once he drove it out of the sales room it’s value would decline to around $170,000.
In circumstances where he husband entered into a significant liability to acquire a prestige motor vehicle post separation and was aware that there would be an immediate decline in its value, I see no reason why the wife should bear any liability for the difference between the outstanding finance on the vehicle and its present valuation. It would, in my view, not be just and equitable to include such a loss as a liability of both parties.
I am satisfied that the interests of the parties in the property of the relationship at hearing, setting aside the (omitted) properties are:
ASSETS
PROPERTY
OWNERSHIP
VALUE
Property G
Wife
E$1,400,000
Branson Investments Pty Ltd ((omitted) Investment Trust)
Husband
$564, 489
VW Volkswagen (omitted) motor vehicle
Branson Investments Pty Ltd
E$10,646
SUBTOTAL
E$1,975,135
LIABILITIES
PROPERTY
OWNERSHIP
VALUE
Mortgage over property at Property G
Husband’s Tax Liability (year ending 2013)
Joint
Husband
$865,000
32,500
SUBTOTAL
$897,500
SUPERANNUATION
SUPERANNUATION FUND
Member
VALUE
(omitted) Fund superannuation
Wife
E $180,000
Husband
E $63,000
NET NON SUPERANNUATION POOL ASSET POOL - $1,077,635
NET POOL - $1,320,635
Is it just and equitable to make orders between these parties?
I find that this is a matter where it is just and equitable to make an order altering the interests of the parties in the property of the relationship based on the following:-
a)The parties were in a relationship for 14 years:
b)The parties separated in 2013;
c)There is a substantial property pool capable of division.
d)The parties have agreed in principle to the property being divided, but require a determination of the percentage division and how the division is to occur.
Contributions
a. Initial contributions
The wife says that at the commencement of the relationship she had savings of $30,000.00, (exhibit W1) which she applied to the purchase of their first home, the Property L property, in November 1999. The purchase price was $195,000.00. The husband does not dispute the wife’s initial contribution to the purchase of the Property L property. The husband claims that he contributed $7,000.00. The wife disputes this amount and the husband is unable to produce any corroborative evidence in relation to this amount. In these circumstances, I am not prepared to accept that this amount was contributed by the husband.
The wife says she also applied $30,000.00 from an inheritance to reduce the mortgage. She has tendered a copy of the last will of her grandmother (exhibit W2) which provides that all the grandchildren be paid an equal share of her estate and correspondence dated 25 October 1999, to one of those grandchildren from the lawyers of the Executor of the estate referring to the enclosure of a cheque for $30,000.00 (exhibit W2). The husband says he cannot recall the amount of the inheritance. I am satisfied that I can infer that the wife did receive an inheritance of $30,000.000 which she applied to reduce the mortgage over the Property L property.
The husband contributed $17,000.00 in June 2000 which was applied to the loan encumbering the Property L property.
In Pierce v Pierce [1998] FamCA 74, the Full Court of the
Family Court considered the concept of the value of the initial contributions being ‘eroded’ over time and concluded at [28]:
“In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.”
I am satisfied that weight should be given to the wife’s initial contribution as it was applied to the purchase of the parties first home, which real property was then used as security for the purchase of investment properties which, themselves, later became security for the acquisition of the husband’s business franchises.
b. Contributions during the marriage
The wife deposes that she contributed financially, both directly and indirectly, to the acquisition and conservation of the parties’ property. She deposes she contributed directly through the application of her earnings, and the application of $12,715 she received as a redundancy package in 2007 (from (employer omitted)) and $35,834.88 she received as a redundancy payment on 12 December 2012 (from the (employer omitted)), to the mortgage over the first home and the former matrimonial home. She claims that she contributed indirectly by way of her greater contribution to the purchase of the Property L property which provided the springboard for the husband’s acquisition of his business interests and the acquisition of the former matrimonial home which likewise was used as security for the commercial line of credit available to the husband’s business interests. She says she also acted as guarantor on mortgages for the husband’s investment properties.
The wife says that, other than short periods of time, she worked full-time during the course of the relationship other than:
a)8 March 2007 to 3 December 2008 when she nevertheless worked part time; and
b)a period of 3 months after she was made redundant by the (employer omitted) in December 2012.
In cross-examination, the husband agreed that the reason for the wife’s break from employment from March 2007 to December 2008 was that she suffered depression. He further agreed that, consequently, weight should not be given in assessing their contributions to this break in employment.
The wife also submits that the husband dissipated around $35,000.00 of money which would otherwise have been applied for the benefit of the parties when, unbeknown to her, he opened a savings account in his name with the (omitted) Bank.
As to contributions by way of home maker, the wife says that she undertook almost all the domestic duties, shopping, cleaning, cooking and so on, thereby, enabling the husband to apply his energies to the business. She concedes the parties utilised the services of a cleaner once a fortnight during 2006 to 2008 and 2011 to separation.
The husband maintains, correctly, that his earnings during the relationship were higher than the wife’s. His undisputed evidence is that he earned:
a)from the commencement of the relationship to September 2008 between $100,000-$200,000 per annum;
b)in 2009, $66,000;
c)in 2010, $80,000;
d)in 2011, $125,000; and
e)in 2012 and 2013 approximately $180,000 per annum.
He deposes that the wife earned:
a)In 2007, approximately $42,000;
b)in 2008, approximately $24,000;
c)in 2009 - not known;
d)in 2010, approximately $70,000;
e)in 2011, approximately $80,000;
f)in 2012, approximately $83,000;
g)in 2013, approximately $70,000.
The husband deposes that, in addition to his earnings which he applied for the benefit of the relationship, he purchased real estate investments being residential units in Property H, a property at Property T and units in Property E. He deposes that the net proceeds of the Property H, property of around $80,000 (exhibit H5) were applied to reduce the loan encumbering the former matrimonial home and the net proceeds of sale of Property T and Property E were applied to reduce the level of secured debt (Trial affidavit [22]). The net proceeds of these properties is not identified. The husband’s earnings over the course of the relationship increased, no doubt reflecting the generation of earnings and distributions from the acquisition of interests in the (omitted) franchises. He claims he worked long hours to generate the income which he applied to the investments and parties’ properties.
The husband says that both he and the wife contributed equally to domestic duties and that they engaged a cleaner on a weekly basis from 2003 to separation.
The evidence before the Court is that in 2012 both deposited significant sums of money into the (omitted) Bank joint home loan account, including the wife’s redundancy payment, the proceeds from the sale of Property H and other amounts deposited by the husband, the total of which was $137,000.00. On the other hand, as amounts were deposited, so too, were amounts withdrawn. It appears that the (omitted) Bank home loan was used as a facility to support their lifestyle and various unspecified financial commitments (exhibit H3). The evidence in relation to the parties’ joint savings account for the period September 2012 to September 2013 discloses transfers from the joint loan encumbering Property W1 into the savings account and transfers from the savings account into that loan. There were, over this period, regular transfers from the joint home loan into this savings account and then transfers to the same three or four accounts which have not been identified in these proceedings (exhibit W3).
The (omitted) Investment Trust Balance Sheet as at 30 June 2012, lists unpaid trust distributions for the wife at $269,412.00 and husband $45,014. The (omitted) Investment Trust Balance Sheet as at 30 June 2013 lists unpaid trust distributions for the wife at $269,412.00 and husband $182,631.00 (exhibit W9).
The husband opened an account with the (omitted) Bank on 13 November 2012 (exhibit W10). The husband diverted portions of his earnings, which he had hitherto deposited in the parties joint bank accounts, into this new bank account. An amount of $3,000.00 was also deposited by his partner, Mr C, in December 2012. The husband says that he established this account for business and personal expenditure. His evidence was that business expenditure included lunches and two tax payments. He claims the wife was aware of this account.
The wife says that she was aware that the husband had in his possession a (omitted) Bank credit card but was not aware of the existence of this account and the fact that the husband was applying part of his income to this account until these proceedings. The wife points out that, in his first financial statement filed on 26 May 2014, the husband failed to disclose this account. He only did so when he filed his second financial statement on 27 November 2014. The husband says he did not disclose the account initially because the account was closed. I find this explanation unconvincing. The account was not closed. Rather, after three cash withdrawals from 7 October 2013 to 13 October 2013 totalling $16,000.00, there was no activity until a deposit from Mr C on 10 February 2014 of $350.00. The husband was legally represented and was at all times under a duty to provide full and frank disclosure which in respect of this account, he did not.
I accept the wife’s evidence that she was not aware of this account during the relationship. I did not find the husband’s explanation regarding the purpose of the account and how monies were applied convincing. Most of the debits were cash withdrawals and some amounts were large. I find it hard to accept that a business person with an interest in real estate (in (omitted) and (omitted)) which derive the bulk of their income from rent would expend, on a regular basis, amounts from $500.00 to $1,000.00 and up to $2,500.00 on business lunches. The husband claimed in cross examination that two cash withdrawals were payments to the ATO. The husband did not depose to this in his trial affidavit and provided no corroborating documentation to support his evidence that these payment were made to the ATO.
I am satisfied, in the absence of an acceptable explanation from the husband, that the bulk of the monies deposited in and applied from this account from November 2012 to October 2013 was income which he applied for his benefit and which would otherwise have been applied for the benefit of the parties during the relationship. It has the effect of negativing the husband’s claims regarding his direct contributions over this period.
The assessment of contributions was examined in Mallet & Mallet (1984) FLC 91-507 where the High Court indicated what may be loosely referred to as a range, when Wilson J at 79,126 stated:
“However, equality will be the measure, other than it being equal, only if equality of the respective contributions of the husband and wife, each adjusted by reference to their sphere, are equal. The quality of the contribution made by a wife as a homemaker or parent may vary enormously, from the inadequate to the adequate to the exceptionally good. She may be an admirable housewife in everyway or may fulfil little more than the minimum requirements. Similarly, the contribution of the breadwinner may vary enormously and disserves to be evaluated in comparison with that of the other party. It follows that it cannot be said of every case where the parties reside together that equal value must be attributed to the contribution of each. That will be appropriate only to the extent that the respective contributions of the parties are each made to an equivalent degree…”
Further, at 79,127 Wilson J also said that:-
“58. The objective of the section is not to equalize the financial strengths of the parties. It is to empower the Court, following a dissolution of a marriage, to effect a redistribution of the property of the parties if it be just and equitable to do so ...."
I am satisfied that, at the commencement of the relationship, the wife provided a significantly greater direct financial contribution which enabled the purchase of the first home. The significance of this is that this property provided the security for the husband’s entry into the acquisition of interests in real estate and purchases by Branson Investment Pty Ltd, of investment properties. There is no doubt that, as the husband’s business interests grew, the income generated from the business (setting aside the $35,000.00 amount in the (omitted) Bank during the latter part of the relationship) was applied for the benefit of the relationship. The husband’s business venture has been successful as it is now valued at $564,489.00 and generated for him in 2014, a taxable income of $445,726.00 compared to a taxable income in 2013 of $170,159.00. The investment properties have added to the pool of assets of the parties, although as the husband conceded in cross examination they have not been highly successful property investments. However, they have provided a benefit to the parties which cannot be ignored.
Over the course of the relationship there can be no doubt that the husband’s contribution by way of earnings/income to the relationship was greater. Nevertheless, save for some breaks in her employment, the wife also applied her earnings and redundancy payments for the benefit of the relationship. However, the wife’s indirect financial contributions were significant. Through her employment in a professional capacity, she has been in a position to act as joint borrower for the loans encumbering the investment properties. Likewise, the former matrimonial home, together with the investment properties, have provided security for the (omitted) Bank commercial line of credit available to the (omitted) franchises. Without this financial facility, it is unlikely the husband’s business venture could have operated successfully.
There are no children of the marriage. Even taking into account that the parties employed a cleaner, I am satisfied that the wife was mostly responsible for the home making duties.
Overall, looking at the direct and indirect financial and non-financial contributions, I find that the husband’s contributions were greater than the wife’s. However, the difference in my view is slight.
c. Contributions post separation
Following separation the wife moved out of the former matrimonial home and has lived with her mother since. The husband, having had the benefit of residing in that home, has been responsible for the mortgage payments and other costs associated with the dwelling.
The husband and wife closed the joint savings account and distributed the balance, half to each. They have conducted their financial dealings separately.
Superannuation
As I have noted earlier the parties did not seek orders splitting their superannuation interests. With respect to the contributions to superannuation, I am mindful of the Full Court’s observation in C & C (2005) FLC 93-320 at [65] to [66] that:
“65. In summary, then, the trial Judge has a discretion as to how superannuation interests will be treated in a particular case. If superannuation is not included in the list of property but rather made the subject of a separate pool, it will be necessary where a splitting order is sought, or extremely prudent where no such splitting order is sought (in order to ensure that justice and equity is achieved) to:
(a) value the superannuation interest (according to the Regulations if an order under Part VIIIB is sought or according to the Regulations or otherwise if no order is sought);
(b) consider and make findings about the types of contributions referred to in s.79(4)(a), (b) and (c) which have been made by the parties to the superannuation interests on either a global approach or an asset by asset approach depending on the circumstances;
(c) consider the other factors in s.79(4) being the matters in s.79(4)(d), (e), (f) and (g); and
(d) ensure that pursuant to s.79(2) the orders in relation to the parties’ property, and any order under Part VIIIB in relation to superannuation interests are just and equitable.
66.In the context of a consideration of the matters referred to in sub-paragraphs (b) and (c) of the last paragraph, the following matters may well be relevant: the relationship between years of fund membership and cohabitation; actual contributions made by the fund member at the commencement of the cohabitation (if applicable), at separation and at the date of hearing; preserved and non-preserved resignation entitlements at those times; and any factors peculiar to the fund or to the spouse’s present and/or future entitlements under the fund.”
The wife says that her accumulated benefit at the commencement of the relationship was around $25,000. However, she was unable to produce documentation to support this. Otherwise, there was no evidence before the Court regarding factors which may be relevant to ascertaining the extent of the parties’ contribution to the property comprising superannuation. This is so even if I were to adopt the approach set out in West & Green (1993) FLC 93-395.
In these circumstances, I propose to treat the superannuation as part of the list of property. This is the approach the parties adopted in the presentation of their case. I have valued the superannuation interests, having regard to the limited evidence before me. Although I am unable to make findings regarding the contributions of the parties to superannuation, I will consider the parties respective interests in superannuation under s.75(2)(b) of the Act and, further, in determining what orders are just and equitable.
Assessment of Contributions
Bearing in mind, the admonition against attributing a percentage adjustment to contributions in a mechanical way, I am satisfied that the husband’s contributions can overall be assessed as 51.2% and wife’s 48.5%.
The s.79(4)(d), (e), (f) and (g) and the s.75(2) factors
Both parties are in good health, in their early forties and have established professional careers to look forward to. Their relationship was 14 years duration and their marriage around 10 years.
The main issue in dispute is around the income, property and financial resources of each party. The wife claims the disparity is significant and a just and equitable adjustment taking into account this disparity is 5% in favour of the wife. The husband submits that the disparity is not significant as the sale of his business would realise little and impose significant employment restrictions. Moreover, he submits his income is subject to the vagaries of the real estate market.
The husband claims that, although he has accepted the methodology and consequently the valuation by the expert valuer Mr M for the purpose of valuing the (omitted) and (omitted) franchises, his equity in the franchises is effectively Nil as he would not be able to obtain the value ascribed to them. He would be unable to re-establish himself in employment in the areas by reasons of the restrictions associated with the transfer of the businesses to new owners and would have to start from scratch elsewhere.
I am satisfied, from the evidence given by the husband, that he has no intention of selling the (omitted) and (omitted) franchises. In fact, he and Mr C have recently purchased from (omitted) a new territory comprising (omitted), (omitted) and (omitted) for the sum of $125,000.
The husband’s interest in the real estate business is a very valuable asset which he will retain. I am confident the husband will expand his business interests by the acquisition of (omitted) franchises and that this will provide the basis for high future earnings.
Whilst it is to be expected that his earnings derived from distributions from the franchises may fluctuate, I do not accept that the fluctuations will be significant. It is clear that both the (omitted) and (omitted) franchises generate the vast proportion of income from tenancies rather than sales. The husband’s evidence was that he anticipated the level of his 2014 earnings to continue into the future. I am satisfied that I can safely conclude that the husband’s earnings will be, into the future, at least at his current level.
The wife’s income is $110,000.00. It is likely her income will remain around the same, save for moderate adjustments into the future.
The wife’s superannuation benefit is $180,000.00 and is consequently significantly greater than the husband’s which is presently around $63,000.00. I take into account, in determining any further adjustment, under s.75(2) the wife’s more valuable interest in this property. In doing so, however, I bear in mind that given her age, this is not an interest she can benefit from by way of cash withdrawals for some time into the future.
A fact or circumstance which in my opinion I should take into account is, as I have observed, the husband will retain under the proposed property orders a very valuable asset in the sense it provides the basis for ongoing high future earnings by him. By contrast, unless the Court includes in its orders the retention by the wife of the former matrimonial home, she will leave the relationship with no asset of value. Given her financial contributions to the acquisition and growth in the husband’s business interests, this would be inequitable. I am satisfied that, within the constraints of an alteration in property interests which is just and equitable, the Court should strive to enable the wife to retain ownership of the former matrimonial home.
In the circumstances, I am satisfied that it would be just and equitable that an adjustment of 5% is made in favour of the wife.
I am satisfied that the order I propose to make (see below) will not adversely affect the earning capacity of either party. There is no other order under this Act which affects either party. The issue of child support is clearly not relevant.
Just and Equitable Orders
Taking into account my findings in relation to the contributions of the parties and the adjustment having regard to s.75(2) factors, I am satisfied that an alteration of the interests of the parties in the property of their relationship of 53.5% to the wife and 46.5% to the husband is just and equitable.
It is now appropriate to satisfy myself that the actual amount accruing to the parties from such an alteration is just and equitable. And, further, the nature of orders which would effect a just and equitable result and be appropriate in the circumstances
The parties had agreed and urged the Court to adopt a two pool approach by separating out the (omitted) properties from the parties asset pool. I have adopted that approach. The parties have agreed that the properties be sold and the net proceeds of sale be first applied to discharge mortgages encumbering the properties, then, pay the CGT on the sale of the properties and then to be distributed in accordance with the alteration of the parties property in the primary pool the Court determined was just and equitable. As there are no sworn valuations of the properties and the CGT on their sale is still to be determined, it is impossible to precisely ascertain the actual amounts that each party will receive when the residual is distributed 53.5 % to the wife and 46.5% to the husband.
I have earlier determined that the value of the property is $1,320,635.
A 53.5% adjustment in favour of the wife results in an amount of $706,539.72. She will retain an asset, the VW Volkswagen (omitted), valued at $10,646 and her superannuation benefit of around $180,000. The actual amount she will be entitled to is, therefore, $515,893.72.
A 46.5% adjustment in favour of the husband results in an amount of $614,095.27. He will retain his business interests which are valued at $564,489 and his interest in superannuation which is around $63,000. The value of this property is in excess of the amount of his entitlement by $13,393.73
Both parties press for the ownership of the former matrimonial home. The husband submits that if the ownership of this asset is not distributed to him, then the former matrimonial home should be sold and the net proceeds distributed to the parties in amounts that the Court determines is just and equitable. He maintains that the wife is simply unable, given her present shortfall in her expenditure over income and her loan capacity, to sustain the financial burden of the mortgage and associated costs and to pay him an amount which would be necessary in meeting a just and equitable alteration. He maintains that selling the property by public auction enables both parties to bid for the former matrimonial home and maximise the value to be obtained from this assets.
The wife has tendered correspondence evidencing that her loan capacity for the former matrimonial home is $820,00.00 and she says that any shortfall will be made up by a financial gift from her mother. She says she is perfectly able to modify her expenditure to meet the financial demands of a home.
I am not prepared to engage, as urged by the husband, in an assessment of the wife’s capacity to take on the liabilities and costs associated with the former matrimonial home. The task before the Court is to frame orders which are just and equitable.
I agree with the wife that the husband will retain a very valuable asset; namely, his interest in real estate (omitted), which has the capacity to generate a high income for the husband. Having regard to the direct and indirect financial contributions made by the wife to the acquisition of this valuable asset during the course of the relationship, it is in my view just and equitable that she be permitted to retain ownership of the former matrimonial home.
The equity in the former matrimonial home is approximately $535,000.00. This is in excess of the amount the wife would be entitled to by $19,106.
Standing back and taking a holistic view of the circumstances of this case, I am satisfied that a just and equitable order is one which provides that the wife retain ownership of the former matrimonial home with no further cash adjustment to the husband (other than the proceeds of the (omitted) property). This effectively means a further adjustment to the wife of around $5,700.
This outcome where the wife retains valuable real property and the husband retains his valuable business asset is, in my opinion, just and equitable.
An issue in dispute is which agent should be responsible for the sale of the (omitted) properties. The husband maintains that if the agent is (omitted) Real Estate, then the parties can benefit from the fact that there would be no commission and a discount in advertising fees. The wife says that because of the husband’s behaviour during the latter part of their relationship, she does not trust him with the sale. Although the wife may well have lost trust in her husband, I am not satisfied that there would be any disadvantage to the parties if (omitted) Real Estate were appointed as agent for the sale of the (omitted) properties and hence will provide that (omitted) Real Estate be the agent appointed to conduct the sale of the (omitted) properties.
Another issue in these proceedings is the fact that the (omitted) Bank commercial line of credit is secured over the former matrimonial home and the Property W property. Both parties agree that the husband should take all such actions necessary to release the wife from any liability in respect of this line of credit. Interim orders were made on 21 July 2014 providing for the sale of the (omitted) properties, including the Property W property where the husband was able to make acceptable arrangements with the mortgagee. Acceptable arrangements were not made with the (omitted) Bank with respect to the commercial line of credit. The wife is rightly concerned to ensure that the husband procure the wife’s release from any liability associated with this line of credit in a timely fashion and that she be indemnified from any call on the said line of credit. I have fashioned the order with respect to this mortgage to take into account her concerns.
The husband has proposed an order in relation to the agreement between the parties that the CGT from the sale of the (omitted) properties be paid from the net proceeds of the sale of those properties. The amount of the CGT and the date it is to be paid is, of course, not known. The Husband proposes that from the net proceeds of sale, an amount of $65,000 be held on trust by his solicitors to be applied to any payment upon it becoming due. Any surplus or shortfall in funds are to be divided in the proportion determined by this Court.
The wife’s preference is that she pay her equal share of the CGT as it becomes due and payable. She is concerned about not being able to access her share of an amount of $65,000. She accepts, however, that the husband has a legitimate concern about pursuing the payments from her in the future. She is also concerned that the husband may be tardy in executing the tax assessments. She asks that if an amount is to be set aside then she be required only to set aside at most $25,000 from her share. I am satisfied that I should order that the husband execute the relevant tax assessments by 30 August in the year after the property is sold. Otherwise, I am satisfied the order proposed by the husband is just and equitable in the circumstances.
Conclusion
For the reasons set out in the judgment I make the orders above.
I certify that the preceding ninety six (96) paragraphs are a true copy of the reasons for judgment of Judge Jones
Date: 23 January 2015
Key Legal Topics
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Family Law
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Property Law
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Tax Law
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Damages
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Remedies
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Statutory Construction
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