JIAN & LANG
[2020] FamCA 696
•24 August 2020
FAMILY COURT OF AUSTRALIA
| JIAN & LANG | [2020] FamCA 696 |
| FAMILY LAW – PROPERTY SETTLEMENT – Just and equitable – Where the applicant wife and respondent husband were in a relationship for approximately 11 years – Where the wife seeks an adjustment in her favour of 70/30 – Where the husband seeks an adjustment in the wife’s favour of 55/45 – Where the myriad of contributions made by each party should be assessed as favouring the wife in the proportion of 60/40 – Where none of the factors in s 75(2) call for any adjustment to that proportion – Where the husband and wife will each retain certain property and the wife shall pay the husband $280,420 (or $234,470 if she elects to return a motor vehicle to the husband) within 60 days. |
| Family Law Act 1975 (Cth) |
| Horrigan & Horrigan [2020] FamCAFC 25 Jones v Dunkel (1959) 101 CLR 298 Kennon & Kennon (1997) FLC 92-757 Stanford v Stanford (2012) 247 CLR 108 |
| APPLICANT: | Ms Jian |
| RESPONDENT: | Mr Lang |
| FILE NUMBER: | BRC | 10266 | of | 2019 |
| DATE DELIVERED: | 24 August 2020 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Carew J |
| HEARING DATE: | 20, 21, 28 & 29 May 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms A. Bertone |
| SOLICITOR FOR THE APPLICANT: | KMB Legal |
| COUNSEL FOR THE RESPONDENT: | Ms S. Fraser |
| SOLICITOR FOR THE RESPONDENT: | MBA Lawyers |
Order
Within 60 days of the date of this Order, the following shall occur contemporaneously:
(a) The husband shall refinance into his sole name the mortgage secured against the title to the property situated at M Street, Suburb N, more particularly described as Lot … on RP … with title reference number … (the “Suburb N property”) in favour of Q Limited;
(b) The wife shall transfer to the husband, at the expense of the husband, her interest in the Suburb N property;
(c) The wife shall pay to the husband the sum of $280,420 (save that if the wife elects to return the motor vehicle 1 to the husband the sum to be paid shall be decreased by $45,950 to $234,470);
(d) The wife shall transfer and assign to the husband, at the expense of the husband, her interest in the following:
(i)S Pty Ltd ACN …10;
(ii)Jian-Lang Family Trust.
(e) The wife shall resign as a Principal of the Jian-Lang Family Trust;
(f) The husband shall cause S Pty Ltd ACN …10 to transfer to the wife:
(i)The motor vehicle 1 (unless the wife returns the vehicle to the husband); and
(ii)The motor vehicle 2;
(g) The wife and husband shall sign all documents and do all things necessary to close the joint Westpac Bank account #…94 with the husband to retain the proceeds;
(h) The wife shall transfer the boat to the husband.
Pending the transfer of the Suburb N property to the husband:
(a) The husband shall pay the mortgage instalments and other outgoings associated with the Suburb N property as and when they fall due;
(b) The husband shall be entitled to occupy the Suburb N property to the exclusion of the wife.
In the event that the husband in his capacity as director of S Pty Ltd ACN …10 has not already vacated the premises at the BB Street, Suburb D (“the BB Street property”) he shall do so forthwith and the husband shall:
(a) Remove any and all plant, equipment, machinery and chattels owned or used by S Pty Ltd ACN …10; and
(b) Ensure the BB Street property is left vacant and in a clean and tidy condition.
In the event the husband fails to comply with paragraph 1(a) hereof within 60 days of the date of this Order, the Suburb N property shall be placed on the market for sale within 7 days of his non-compliance.
Upon the sale of the Suburb N property, the proceeds of sale shall be disbursed as follows:
(a) In payment of all reasonable sales fees, commissions, marketing costs and legal fees related to the sale;
(b) In discharge of the mortgage in favour of Q Limited, currently in the sum of $532,334; and
(c) In payment of the remaining proceeds of sale to the husband.
In the event the Suburb N property is required to be sold, then pending the sale of the Suburb N property, the husband shall:
(a) Be solely responsible for the payment of the mortgage instalments and other outgoings as and when they fall due;
(b) Do all things necessary to present the property in a clean and tidy condition for any inspections by prospective purchasers;
(c) Vacate the property not less than 7 days prior to the settlement date; and
(d) Remove all furniture, chattels, rubbish etc from the property to provide vacant possession.
In the event the wife fails to comply with paragraph 1(c) hereof within 60 days of the date of this Order, the BB Street property shall be placed on the market for sale within 7 days of her non-compliance.
Upon the sale of the BB Street property, the proceeds of sale shall be disbursed as follows:
(a) In payment of all reasonable sales fees, commissions, marketing costs and legal fees related to the sale;
(b) In payment of such amount that may be owing to the husband pursuant to paragraph 1(c) hereof, plus interest as calculated in accordance with the Family Law Rules 2004 (Cth);
(c) In payment of the remaining proceeds of sale to the wife.
The husband shall indemnify the wife in respect of any taxation liability, or other debts present or future, incidental or otherwise, including taxation debts pertaining to any dividends or distributions attributed to the wife relating to S Pty Ltd ACN …10 and the Jian-Lang Family Trust from 30 June 2019.
Within 14 days of the date of this Order, each party shall do all acts and things and sign all documents in their capacity as directors of Z2 Pty Ltd ACN ...79 as trustee for the P Super Fund (self-managed super fund) to ensure the P Super Fund is fully compliant with all legislation, including but not limited to, the Superannuation Industry (Supervision) Regulations 1994 (the “SIS Regulations”).
Within 30 days of the date of this Order, the wife shall provide notice to the husband in his capacity as director of Z2 Pty Ltd ACN ...79 in accordance with Reg.7A.06 of the SIS Regulations of her request to roll-over or transfer her entitlements in the P Super Fund (self-managed super fund) currently in the sum of $94,989.93, to another regulated superannuation fund of her choice.
Upon the roll-out of the wife’s entitlements in the P Super Fund (self-managed super fund), the wife shall sign all documents provided to her by the husband, at the expense of the husband, to resign as a director of Z2 Pty Ltd ACN ...79.
Save as otherwise provided in this Order, the wife shall retain absolutely her interest in the following:
(a) The property at MM Street, Suburb B;
(b) The BB Street property;
(c) V Pty Ltd ACN …60;
(d) Any cash at bank; and
(e) Her furniture and personal items.
Save as otherwise provided in this Order, the husband shall retain absolutely his interest in the following:
(a) His entitlements in the P Super Fund;
(b) His cash at bank; and
(c) His furniture and personal items.
Save as otherwise provided in this Order, each party shall retain to the exclusion of the other, any property in that party’s name, possession or control.
Save as otherwise provided in this Order, each party shall be liable for, and shall forever indemnify the other party against, any liability in that party’s name and/or any liability encumbering any item of property to which that party is entitled pursuant to this Order.
Each party shall do all acts and things and sign all documents necessary to give effect to this Order.
In the event that either party refuses or neglects to sign or execute and return a document within 14 days of a written request to do so then the Registrar or Deputy Registrar of the Family Court of Australia at Brisbane is hereby appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to sign or execute all deeds and/or instruments in the name of the defaulting party and do all acts and things to give validity and operation to the deeds and/or instruments.
IT IS FURTHER ORDERED BY CONSENT
Within 30 days of the date of this Order, the husband in his capacity as director of S Pty Ltd ACN …10 shall pay to the wife such rates and taxes levied on the BB Street property between 29 May 2020 and the date the husband vacates the premises, on a pro-rata basis.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Jian & Lang has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC 10266 of 2019
| Ms Jian |
Applicant
And
| Mr Lang |
Respondent
REASONS FOR JUDGMENT
Ms Jian (“the wife”) and Mr Lang (“the husband”) married in 2013, having commenced a relationship in about 2008 and separated on a final basis in about 2019. They are unable to agree about how the property they own either jointly or individually should be divided.
They have an agreed property ‘pool’ of $2,888,170 and the wife contends that she should receive 70 percent[1] (plus reimbursement of outstanding rent and outgoings on a property and a motor vehicle 1 and motor vehicle 2) while the husband contends the wife should receive 55 percent[2] and the motor vehicle 2. The husband agrees that outstanding outgoings on a property should be paid to the wife on a pro rata basis, but only from 29 May 2020.
For the reasons which follow, I propose that the property of the parties or either of them be divided in the proportion 60 percent to the wife and 40 percent to the husband. In addition, the husband will pay the wife on a pro rata basis for outstanding outgoings on a property from 29 May 2020. The wife will retain the motor vehicle 2 and have the option to retain the motor vehicle 1.
Background
The wife was born in China and is 52 years of age. The wife moved to Australia in 1997 and is an Australian citizen. The wife has two adult children from her first marriage, namely, Ms F born in 1994 and Mr E born in 1997. The wife is currently unemployed. She was diagnosed with an illness in 2015 and underwent treatment.
The husband was born in Australia and is 50 years of age. The husband has two children from his first marriage, namely, XX born in 2002 and YY born in 2004. The husband pays child support of $154 per week for these children. The husband is a director of S Pty Ltd which is the corporate trustee for the Jian-Lang Family Trust. The business operated by the husband trades as S Pty Ltd. The husband is in good health.
The parties met on a dating website in May 2007 when they were both married and living with their respective spouses (although the wife’s first husband spent most of his time in Country WW). The wife finally separated from her first husband in about November 2008 and the husband finally separated from his first wife in or about May 2008. It is common ground that the parties were in a relationship by at least late 2008.
The parties married in 2013 and have one child together, namely, Y (“the child”), who was born in 2010. The child lives with the wife and spends time with the husband for five nights per fortnight. The husband’s current child support assessment is $348 per month, although no child support is paid by him.
The parties separated on a final basis sometime in about mid-2019.
The wife contends that she and the husband separated on six prior occasions before their final separation in 2019 and that they did not live together permanently until 4 December 2017 apart from a few months in each of 2011 and 2014. Notwithstanding these contentions, the wife also deposes to living with the husband from about April 2017 for three days a week and most weekends, and elsewhere in her affidavit she deposes to living with the husband from November 2017 and only returning to stay at her property at MM Street, Suburb B (“the MM Street property”) “occasionally”.
The husband contends that he and the wife commenced to live together in November 2008 and continued to live together until January 2017 save for two or three weeks in September 2011 when they had a brief separation, and another separation from January to April 2017. The husband concedes that there were periods when he stayed with his children at other properties because of what he contends were tensions between the wife and his children. His children shared their time between their parents. The husband contends that while he and the wife reconciled in April 2017, they did not resume living together permanently. They jointly purchased a home at M Street, Suburb N (“the M Street property”) in late 2017 but the husband contends the wife did not live permanently at this house with him but stayed overnight for several nights each week when his children were not with him. Y lived at both the M Street property and the MM Street property.
Irrespective of the actual time spent living together, the wife and husband accept that they were, for the most part, in a relationship between 2008 and 2019.
The wife makes very general accusations of physical, emotional and financial abuse but provides no particulars of the alleged abuse and does not seek any findings in relation to her allegations. There is no suggestion in her case that the principles enunciated in Kennon[3] apply to this case.
Applicable legal principles
In property settlement proceedings, the court may make such order as it considers appropriate altering the interests of the parties to the marriage in the property, including an order for a settlement of property in substitution for any interest in the property for the benefit of the parties and an order requiring either or both of the parties to the marriage to make, for the benefit of either or both of the parties, such settlement or transfer of property as the court determines (s 79(1)).
The court shall not make an order unless it is satisfied that, in all of the circumstances, it is just and equitable to make the order (s 79(2)).
In considering what order (if any) should be made in property settlement proceedings, the court is required to take into account the following (s 79(4)):
a)The financial contribution made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;
b)The contribution (other than financial) made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;
c)The contribution made by a party to the welfare of the family constituted by the parties and any children, including any contribution made in the capacity of homemaker or parent;
d)The effect of any proposed order upon the earning capacity of either party;
e)The matters referred to in s 75(2) of the Act so far as relevant;
f)Any other order made under the Act affecting a party;
g)Any child support under the Child Support (Assessment) Act 1989 (Cth) that a party has provided, is to provide, or might be liable to provide for a child of the marriage.
The High Court of Australia in Stanford v Stanford[4] identified certain principles applicable to applications for property settlement. In particular, when considering whether it is just and equitable to make an order, it is firstly necessary to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. Secondly, the discretion as to whether or not to make a property settlement order, although extraordinarily wide, must nevertheless be exercised in a principled way. Thirdly, there is no presumption that the parties’ rights to or interests in property are or should be different from those that currently exist. The consideration of whether it is just and equitable to make an order should not be considered by reference only to the matters in s 79(4). It is necessary to give separate consideration to s 79(2) and (4) and not to ‘conflate’ the two subsections.
Is it just and equitable to make an order?
Neither party contend that it is not just and equitable to make an order. That position is understandable given that the parties separated in 2019 and “there is not and will not thereafter be the common use of property” by the parties.[5] Additionally “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 relationship”.[6] In such cases the “just and equitable requirement is readily satisfied”[7] and I am satisfied in this case that it is just and equitable to make an order.
Agreed Balance sheet
The parties agree on the value and ‘pool’ of property relevant to these proceedings as set out in the table below:
Ownership Description Value ASSETS 1. W MM Street, Suburb B $ 1,250,000 2. W BB Street, Suburb D $ 900,000 3. H&W M Street, Suburb N $ 950,000 4. W Suburb D $ 25,000 5. W & H[8] S Pty Ltd (shares in W’s sole name valued at nil); S Pty Ltd ATF Jian-Lang Family Trust ($30,000); related party loans ($157,270) rounded up as per UU Accountants valuation $ 187,500 6. H Funds in Westpac Bank Account #…76 $ 500 7. W Funds in ANZ Bank Account #…29 $ 3 8. W Funds in ANZ Bank Account #…92 $ 193 9. W Funds in ANZ Bank Account #…12 $ 182,323 10. W Funds in ANZ Bank Account #…54 $ 54 11. W Funds in G Bank Account #…99 $ 2,635 12. H&W Funds in Westpac Bank Account #…94 $ 43 Total $ 3,498,251
ADD BACKS 13. H Legal Fees paid to Husband’s Lawyers by S Pty Ltd $ 91,702 16. W Legal Fees paid to Wife’s Lawyers from Wife’s capital $ 68,867 Total $ 160,569
LIABILITIES 17. H&W Q Limited loan secured over M Street $ (532,334) 18. W ANZ Residential Investment Loan $ (531,692) Total $ (1,064,026)
SUPERANNUATION Member Name of Fund Type of Interest Value 21. H&W Z2 Pty Ltd Self-managed $ 293,…76 ATF the P Super Fund – value as at 30/06/19 after taking into account outstanding tax liability of $12,841.06
NET ASSETS (including Superannuation and Add Backs)
$ 2,888,170
Initial contributions
The wife contends that she separated from her first husband in November 2008 and settled property matters with him on the basis that she retained assets with an estimated value of $1,831,092.[9] There is no corroboration for such an agreement - the wife stating that it was an entirely verbal agreement. The evidence relating to the alleged agreement is less than satisfactory. The wife does not, for instance, state what her first husband received as a result of their apparent agreement to amicably divide their property, nor does she disclose in her affidavit material that at about this time her first husband withdrew $600,000 from a joint account without her consent (although this does not appear to be included in her alleged initial contributions). In this context, I also note that the wife did not dispute or explain in her reply affidavit an unexplained withdrawal from her ANZ account #…12 of $550,000 on 10 May 2010. One might have thought that the wife’s first husband could have given evidence about the agreement reached with the wife in relation to their property settlement and what each of them retained. No explanation for his absence was provided in circumstances where the wife says it was an amicable settlement. I can only assume that had he given evidence about these issues, it would not have assisted the wife.[10]
Details of the wife’s contention relating to her initial contribution is set out in the table below:
Description of property
Wife’s estimated value
Documentary evidence in support
KK Street, Suburb N (less mortgage of $120,000)
$470,000[11]
Settlement statement dated 29.04.10 with sale price of $590,000, mortgage of $118,843 and sale costs of $1,435. Balance of $439,820 deposited into wife’s account #…12 on 28.04.10. Also deposited into that same account were two sums from the real estate agent totalling $21,310 which I infer is the balance deposit less commission.
ANZ Term Deposit in wife’s name #…94
$63,391
Record of investment dated 06.05.08
G Bank Term Deposit in wife’s name #…88
$527,395
Term deposit statement for period 29.05.08 to 28.11.08 with initial deposit of $506,451 and anticipated interest of $20,948.
ANZ bank account #…12
$126,267
None
ANZ Bank Term Deposit #…54
$134,005
None
Interest in Jian Family Trust consisting of bank accounts:
NN Limited Access A/c #…90 $…05,427
NN Limited Access A/c #…99 $4,603
$510,030
NN Limited transaction statement #…90 for LL Pty Ltd ATF Jian Family Trust for period 16.07.07 (balance $10,000) to 01.09.19 (balance $5,286). Balance as at 01.11.08 $3,357 and balance as at 01.12.08 $…05,427.
NN Limited transaction statement #…99 for LL Pty Ltd ATF Jian Family Trust for period 06.09.07 (balance $600,000) to 20.01.12 (balance nil). Balance as at 01.11.08 $4,578 and balance as at 01.12.08 $4,603.
Total
$1,831,092[12]
While not included in the above table, it is common ground that the wife purchased the MM Street property in October 2008 for $888,000 plus stamp duty and legal costs. No explanation was provided for the absence of this property from the wife’s list of initial contributions. It is unclear to me whether it was an oversight or there was some other reason for its absence, but perhaps explains why the wife’s counsel, during submissions, sought to inflate the wife’s initial contribution by $600,000, representing the sum advanced to the wife by her parents and used by the wife towards the purchase of the MM Street property. It is not clear to me whether the difference between the purchase price for the MM Street property and the $600,000 is included in the wife’s table as set out above or is additional thereto.
The wife says that she used her own funds and $600,000 “lent” to her by her parents to purchase the MM Street property. She said during cross-examination that her first husband reneged on an agreement to jointly purchase the MM Street property with her and withdrew $600,000 from a joint ANZ account without her consent. According to the wife, her first husband’s actions left her short of funds to complete the purchase of the MM Street property because her G Bank Term Deposit did not mature until after the settlement date. The wife said during cross-examination that the withdrawal of $600,000 by her husband left her in the position where she had to “urgently ask my parents help to settle the house”. When it was brought to the wife’s attention that her evidence-in-chief was that her parents had lent her (the Jian Family Trust) $600,000 in 2007 for investment purposes, she said that she needed to seek their permission to use the $600,000. This evidence is at odds with the wife’s concession that she treated the Jian Family Trust as her own property. While the wife certainly indicated that she regarded herself as at least morally obligated to repay her parents should they request the return of the $600,000, there is no suggestion in the wife’s case that the $600,000 advanced to her by her parents should be treated as a liability. Indeed, as already noted, the wife’s counsel urges the Court to regard this $600,000 as part of the wife’s initial contribution.
The husband submits that the wife’s initial contribution was “some amount less than $1,570,820”. I am not sure what, if any, concession this represents.
In arguing that the wife’s initial contribution was less than that claimed by her, the husband submits that the wife overstates the net value of the property at KK Street, Suburb N (“the KK Street property”) and in any event has failed to provide any expert historical valuation. Further, it is submitted that there is no reliable evidence of the debt on that property as at commencement of the relationship in November 2008. As already noted, a concession was made by the wife’s counsel that the value of this property should be reduced from $470,000 (as claimed by the wife) to $335,000 for the purpose of identifying her initial contribution.
The husband also takes issue with the balance in certain bank accounts for which the wife produced no corroboration i.e. ANZ account #…12 said to have a balance of $126,267 and ANZ Term Deposit #…54 said to have a balance of $134,005. I appreciate that attempting to locate documents from 2008 may be difficult, however, the wife does not explain how she is able to specify with such apparent precision the balances in those accounts in the absence of statements. Nor does she state what attempts she has made to obtain any relevant records. Accordingly, I place little weight on the wife’s evidence in relation to these two accounts.
I conclude that is not possible to find with precision the value of the wife’s initial contribution as at November 2008. However, as authorities such as Pierce & Pierce[13] demonstrate, it is important to consider the use made of contributions and in that context it is not in dispute that the wife owned the KK Street property at the commencement of the relationship and that she sold that property for $590,000 in 2010. At that time, the mortgage balance was $118,000. While the husband contends that he assisted with renovations to that property (a contention disputed by the wife), including a kitchen renovation, installing new stone bench tops, a sink and appliances and repainting the kitchen and lounge room area, I am not persuaded that such contributions, even if made, greatly detract from the significance of the wife’s contribution in relation to this property. There is also no dispute that the wife alone (as between the parties) provided the funds for the purchase of the MM Street property (with the assistance of the $600,000 from her parents). The wife also held at least an interest in a number of bank accounts (#…88 and #…90) with total balances of over $1,000,000 at times proximate to the commencement of the relationship. Whether or not the wife’s claimed initial contribution should be reduced by any interest of the wife’s first husband is difficult to determine. The wife says not but as already noted there is no explanation for the absence of evidence from the wife’s first husband and there is no explanation for the withdrawal of $550,000 on 10 May 2010. I am nevertheless prepared to find that the wife retained at least a significant portion of the funds in bank accounts at the commencement of the relationship because it is not in dispute that she lent funds to the various businesses conducted by the parties during the relationship.
The husband contends that his initial contributions totalled $1,467,000, detailed in the table set out below:
Description of property
Husband’s value
Documentary evidence in support
QQ Pty Ltd
Nominal
RR Pty Ltd ATF SS Family Trust
($182,000)
Westpac business overdraft statement #…16 for period 03.11.08 (balance ($182,590) to 06.11.08 (balance ($135,492)
Z1 Pty Ltd ATF The Lang Family Trust
In relation to the real property - historical valuations by expert as at 01.11.08
In relation to Westpac a/cs – bank statements
TT Street Suburb AA
$665,000
VV Street FF Town
$240,000
DD St FF Town
$240,000
GG St FF Town
$240,000
CC Street Suburb D
$420,000
HH Street Suburb JJ
$230,000
Westpac loan #…13
($300,000)
Westpac loan #…12
($236,000)
Westpac a/c #…77
$65,000
Westpac loan #…16
($280,000)
Westpac loan #…96
($210,000)
W Pty Ltd
In relation to the real property - historical valuations by expert as at 01.11.08
In relation to Westpac a/cs – bank statements
X Street Suburb AA
$500,000
EE Street Suburb AA
$585,000
Westpac a/c #…65
$1,000
Westpac loan #…52
($117,000)
Westpac loan #…79
($260,000)
Z2 Pty Ltd ATF P Super Fund
Westpac a/c statement #…05
Husband $581,708
Represented by real property above
Husband’s first wife $25,560
Represented by real property above
Westpac a/c #…05
$16,000
Payment to first wife made 17.09.09
(150,000)
Total
$3,202,000
($1,735,000)
$1,467,000 (net)
The wife does not dispute the historical value of the properties owned by the entities as identified by the husband, but argues that in the absence of the financial statements for the entities it is not possible to find that the net value of the property represented the husband’s initial contribution. It is suggested, for instance, that capital gains tax would have been a liability reducing the value of the husband’s interest. I am not convinced that financial statements would have reflected potential liabilities of that kind, which would depend upon the sale price for the properties. Further, it is argued that as the husband’s first wife continued to have an interest in the entities until at least some time in 2010, it is not possible to identify the husband’s interests as opposed to their joint interests. The wife submits that the husband’s initial contribution should be assessed as nil.
The husband’s first wife continued to hold 50 percent of the shares in RR Pty Ltd until 14 September 2010. As at November 2008, this company had a debt of $182,000. The husband does not claim that this entity had any assets. The husband’s first wife held a 25 percent shareholding in Z1 Pty Ltd ATF The Lang Family Trust. The Lang Family Trust was a discretionary trust. The husband maintained the majority and controlling interest in the trustee company and the trust. The husband concedes that his first wife was most likely a shareholder of all of the entities referred to in the table above.
The husband maintains that his first wife agreed to settle her property entitlement by retaining a home at Suburb J and receiving a payment of $150,000 (which is included as a liability in the table above), although he concedes some further payments were made to her of smaller sums totalling $45,600, which he suggests were for child support. Other than stating that she and the husband agreed to a property settlement, the husband’s first wife does not address any of these matters in her affidavit. I can only assume that had she given evidence about these issues it would not have assisted the husband.[14]
During the period 2009 to 2013, the husband sold his real property. The proceeds were utilised by the husband in trying to avoid the liquidation of his business interests, ultimately to no avail.
Details of the sale proceeds and utilisation of them are represented in the table below:
Property description
Sale price
Sale date
Distribution of proceeds
VV Street FF Town
$240,000 (valued at $240,000 as at 01.11.08)
09.11.09
$153,902 to discharge loan #…69. ($75,512 to a/c #…77 of which $66,057 transferred to Super Fund a/c …05)
X Street Suburb AA
$520,000 (valued at $500,000 as at 01.11.08)
04.05.10
$260,331 to discharge loan #…79 which had a debit balance of $117,000 in 11.08. $232,622 to reduce overdraft a/c …16 which had a debit balance of $182,590 as at 06.11.08)
HH Street Suburb JJ
$…90,000 (valued at $230,000 as at 01.11.08)
05.09.11
$148,389 to reduce loan #…96 which had a debit balance of $210,000 in 11.08.
TT Street Suburb AA
$511,000 plus GST (valued at $665,000 as at 01.11.08)
19.12.11
$39,864 to reduce loan #…13 which had a debit balance of $300,000 in 11.08. $7,297 to a/c …77. $61,610 to discharge loan #…96 which had a debit balance of $210,000 in 11.08. $63,932 to reduce overdraft #…16. $53,778 to discharge loan #…08. $169,851 to discharge loan #…17. $83,534 to discharge loan #…52.
EE Street Suburb AA
$375,000 plus GST (valued at $585,000 as at 01.11.08)
06.01.12
$349,683 to discharge loan #…13 which had a debit balance of $300,000 in 11.08. $37,623 to a/c …65. $14,868 to reduce loan #…12 which had a debit balance of $236,000 in 11.08
CC Street Suburb D
$318,000 (valued at $420,000 as at 01.11.08)
18.01.12
$283,040 to discharge loan #…16 which had a debit balance of $280,000 in 11.08
DD Street FF Town
$125,000 (valued at $240,000 as at 01.11.08)
12.03.12
$107,773 to reduce loan #…12 which had a debit balance of $236,000 in 11.08
GG Street FF Town
$140,000 (valued at $240,000 as at 01.11.08)
26.03.12
$117,356 to discharge loan #…12 which had a debit balance of $236,000 in 11.08. $11,856 to a/c #…77
Total (E)
$2,419,000
$2,211,211 (total debt as at 08.11 was $1,735,000)
What is immediately apparent from the above table is that the eventual sale price for the properties was substantially less than the valuations as at November 2008. The total valuation for the real properties in November 2008 was $3,120,000. They ended up selling for a total of $701,000 less. It is therefore artificial in my view to only consider the value of the properties as at November 2008 in assessing the husband’s initial contribution without regard to their eventual sale price. I nevertheless reject the wife’s submission that the husband’s initial contribution should be assessed as nil.
Doing the best I can, I find that the wife’s initial contribution is likely to have exceeded the husband’s initial contribution. In coming to that conclusion, I place particular weight on the uncontentious evidence of the wife’s ownership of two real properties in November 2008 and her interest in substantial cash investments, although I also place some weight on the unexplained withdrawal in 2010 of $550,000. I also place particular weight on the husband’s retention of the various real properties until their sale and the direction by him of the proceeds of sale, which indicates at the very least a substantial interest in the properties. A significant portion of the proceeds of sale was used to pay out debt the husband had at the commencement of the relationship. The husband also had available to him some cash sums which he introduced as at November 2008.
Contributions during the relationship
The wife contends that she and the husband kept their finances separate throughout their relationship. On the wife’s case, she bought and sold property in her sole name, lent money to the husband’s business and received significant sums from her parents. In relation to the latter, other than the bare assertion, the wife provides no evidence to support her contention that she received significant sums from her parents, other than the initial $600,000 used towards the purchase of MM Street and a ‘loan’ of $99,000 in August 2017.
The wife presents a case suggesting that up until the incorporation of S Pty Ltd in March 2012, she took no significant part in the business and that she merely advanced money to the husband when requested. This suggestion appears to be motivated by an attempt to attribute responsibility for the ultimate failure of the building installation business to the husband alone and thereby inflate her own contribution. I reject those contentions. As early as 2009, the parties travelled to AC City together where they not only visited the wife’s parents but also visited factories relevant to their building and electrical installation business. It was, in part at least, a business trip. The wife worked in the business and was also a director of R Pty Ltd which operated the business from February 2009.
Until 24 April 2010, both the wife and husband were directors of R Pty Ltd. The husband was the general manager of the business. The wife attended to administration including issuing business invoices and looking after the finances for the company but says she was not paid. The wife describes her role as one of “administrator”. The company was established to take advantage of the then Government Program. The program was cancelled in 2010.
The husband’s properties were used as security for the overdraft utilised in the operation of the business.
The husband says that the wife always controlled their finances and he was content for real properties purchased during the relationship to be registered solely in the wife’s name for asset protection reasons. As the director of several companies he had given personal guarantees and says that he was aware that if the business failed he would be personally liable hence the decision to have assets in the wife’s sole name. In my view it is likely that a motivating factor for the registration of properties in the wife’s sole name was for asset protection purposes. I reject the wife’s contention that her contribution should be assessed as greater than the husband’s by reason of properties being registered in her name solely. I also reject the wife’s contention that she kept her finances separate from the husband. I accept that the wife largely controlled the finances and find that there was in fact a significant intermingling of their finances e.g. in the operation of their electrical business the wife purchased ‘small-scale technology certificates’ (“STCs”) using funds from S Pty Ltd Pty Ltd and upon sale deposited the profits into an account in her sole name.
After the closure of the government program, the husband and wife focussed the business on electrical installation. Some installations are subsidised by government issuing of STCs which are tradeable. As explained by the husband:
100. STC’s are issued by the government when a renewable energy system is installed. At completion of the installation, each customer signs a STC assignment in favour of the business. The STCs can be traded through the open STCs market at spot price or through the government’s STCs clearing house at a fixed price of $40 each. …
It is common ground that the wife made various loans to R Pty Ltd and that the husband and wife agreed to prioritise the repayment of the loans made to the business by the wife and to protect assets in her name. Accordingly, on 2 August 2011 8,500 STCs were transferred to the wife and later traded by her for $40 each (a total of $340,000) and on 21 September 2011 the wife registered a fixed and floating charge over the assets of R Pty Ltd to secure $365,000.
The wife also submitted a proof of debt claim in the liquidation of R Pty Ltd on 25 January 2013 for $93,799.
K Organisation were appointed liquidators of R Pty Ltd in January 2013 and remained in that position until the winding up of all of the husband’s companies, which was finalised in September 2014. I accept that the husband did his best to trade out of the business difficulties. I also accept that those difficulties were exacerbated by the cancellation of the government program. It is common ground that the husband sold various properties in the names of entities controlled by him and used the proceeds to reduce debt. The husband says that all debts of the business were repaid save for one taxation debt. The wife concedes that most of her loans were repaid save for about $19,617.
When it appeared inevitable that R Pty Ltd would be going into liquidation, the husband and wife established a new entity, S Pty Ltd to ‘take over’ from the business previously conducted by R Pty Ltd. The wife was appointed sole director and shareholder for asset protection purposes and this remained the case until the husband was appointed sole director in December 2013. The wife remains the sole shareholder. Trading in this new entity commenced in March 2012. S Pty Ltd ATF Jian-Lang Family Trust trading as S Pty Ltd (“S Pty Ltd”) took over all existing customers from R Pty Ltd and took over the same business premises and phone numbers. Both parties were involved in the running of this new business, although they disagree about how best to describe their respective roles. The husband describes himself as general manager of the business and the wife as undertaking administration and managing the business finances. The wife describes them both as managers and says that while the husband was more involved in the technological and organisational side of the business, she was more involved in general day to day administration as account/finance/business manager. I am satisfied that they each undertook core roles in the business and carried out their roles to the best of their abilities.
In January 2013, PP Street, Suburb H (“the PP Street property”) was purchased in the wife’s sole name. It is common ground that the intention was for this home to become their matrimonial home. The home was purchased for $837,000 by utilising a line of credit for $1,000,000 in the wife’s sole name. Ultimately, the home did not become their matrimonial home but was used as a holiday home and by the husband when his children spent time with him, generally for five days each fortnight. During this time, the wife and child also stayed at the PP Street property from time to time. Improvements were carried out to the PP Street property. The source of funds was S Pty Ltd, although the wife contends such sums were attributed to her income solely.
The PP Street property was rented out from about June 2014 and the rent paid into the wife’s bank account. This property was sold for $1,150,000 in October 2015. The $1,000,000 line of credit remained and was secured by the MM Street property and a term deposit in the wife’s name with ANZ. Upon maturity of the term deposit, $348,…99 reduced the line of credit.
The husband and wife are both members of the P Super Fund. In October 2014, the wife and husband incorporated V Pty Ltd ATF P Trust with the intention to acquire real property for the P Super Fund.
In February 2015, BB Street, Suburb D (“the BB Street property”) was purchased in the wife’s sole name for $600,000 utilising the sale proceeds of the PP Street property. The BB Street property became the business premises for S Pty Ltd and a commercial lease agreement was entered into between S Pty Ltd and the wife for the payment of monthly rent of $5,000 plus GST and outgoings. Until September 2019, the wife was paid the rent and outgoings. The wife concedes that between September and December 2019 she received payments from S Pty Ltd of $2,000 per week or about $30,000 in total.
In late 2015, the wife was diagnosed with an illness and it is common ground that the husband took time off work and reduced his work hours in order to look after the wife over a period of about four and a half months. Obviously, the ability of the wife to make contributions during this period was impacted.
In April 2016, P Trust acquired T Street, Suburb B (“the T Street property”) for $357,500. The wife lent the money to the P Super Fund to complete the purchase and in July 2016 she registered a mortgage over the property to secure $250,000. The husband undertook extensive renovations to this property including completing internal repairs, repainting, converting the garage into a fourth bedroom and store room, installing new benchtops and appliances in the kitchen, building a large rear deck, new carpet, window coverings, landscaping and installing a 5kw solar system. The cost of the renovations was paid by S Pty Ltd. The T Street property was rented out from July 2016 until December 2016 for $2,200 per month. The rent was paid to the P Super Fund. Further renovations were undertaken between mid-December 2016 and February 2017. During this period, the husband and his children also stayed at this property when they were in his care. The T Street property was again rented out from February 2017 and was sold in March 2019 for $476,000. Of the proceeds, $132,739 was paid to the wife and $329,691 was paid to the P Super Fund.
It is common ground that between 28 October 2016 and 19 January 2017 the wife transferred to her mother, Ms L, a total of $382,699. The wife says that the monies are intended to be used as a bond for an aged care facility should her mother require admission and any bond will be refunded if her mother dies or leaves the facility. The wife’s parents currently reside in China. The wife says she was happy to provide the money “because my parents have always helped me financially in the past”. It is not suggested by either party that this sum should be notionally included in the pool of property to divide but it is referred to in the husband’s affidavit under the heading “contributions after separation”. I am not sure what I am invited to deduce from this evidence other than to somehow factor it into the assessment of contributions overall. Neither party made submissions about it other than to refer to the fact of the transfers having occurred.
During the period 7 August 2017 and 11 August 2017, the wife’s mother deposited $99,000 into the wife’s bank account which the wife says was a loan made to her at the request of the husband for the purpose of purchasing STCs. Again, I am unsure of the significance, if any, of this evidence. The wife does not suggest that it be treated as a liability. I assume I am invited to treat it as a contribution made on behalf of the wife.
In late 2017, the husband and wife agreed to buy a new home intended to be for their joint occupation. They disagree about whether or not they jointly took up occupation. The M Street property was purchased in joint names in late 2017 for $850,000 of which $552,500 was borrowed, $242,949 was sourced from an account in the wife’s sole name and the balance was sourced from S Pty Ltd. The husband initially moved into this property and commenced renovations. The parties agree that the cost of the renovations were sourced from S Pty Ltd. The husband contends that he personally undertook most of the labour involved with removal of trees, landscaping, replacing stormwater drains, underpinning two sections of the house, re-tiling, repainting inside and outside, installing new lights, new external cladding, new toilet, new carpets, blinds and curtains, construction of two side gates and installation of a solar and battery hot water system. The wife says the renovations were carried out jointly. Neither party was cross-examined about this issue nor are findings sought in relation to it.
The wife contends that she performed all of the household duties such as cooking, cleaning and grocery shopping throughout the relationship and that the husband made no contribution to the welfare or support of her children. The wife contends that the parties lived in separate residences for most of the relationship.
The husband contends that household chores were shared but acknowledges that for the first two years after the child’s birth in 2010, the wife worked reduced hours in the business and assumed the primary parenting role. The husband also contends that between 2011 and 2015 they employed a cleaner. According to the husband, they each made contributions to the support and welfare of their respective children. In particular, it is common ground that the wife did not receive child support for her children from their father. Despite the husband’s acknowledgement of the wife’s contribution to the welfare of his children, the husband says there was always tension between his children and the wife culminating in the wife’s insistence, at various times during the relationship, that he accommodate his children in rental accommodation when they spent time with him. The wife disputes that this occurred at her insistence. The husband says he rented a property for this purpose during the period 19 June 2012 to 22 February 2013.
Whatever the reality about their living arrangements, I find that the parties largely maintained a relationship to which they each made contributions to the welfare of their combined family from in or about November 2008 until in or about June/July 2019. In the early years, and after the birth of the child, the wife is more likely to have made a greater contribution to homemaking and parenting and the husband a greater role in running the business.
After separation, both parties continued to work in the business until the wife ceased to do so in September 2019. The child has continued to live with the mother but spends time with the father generally for five nights each fortnight.
Conclusion about contributions
It has been stated in numerous Full Court authorities that the assessment of contributions is not a mathematical exercise and requires an assessment of the myriad of contributions made by parties in a holistic way across the entirety of their relationship.[15]
With that principle in mind, I find that each of the parties introduced assets into the relationship but it is likely that the wife’s initial contributions exceeded those of the husband. For example, the wife owned the KK Street property when the relationship commenced which she sold in 2010. The net proceeds were about $470,000. The wife also owned the MM Street property which she purchased without funds from the husband. The wife also had available funds which she lent to the business entities from which the parties jointly operated their joint ventures. The husband introduced various real properties which were used as security for the business overdraft during the relationship until sold to reduce debt, including debt he had at the commencement of the relationship.
Throughout their relationship each party worked in the various businesses and were invested in ensuring the success of their joint ventures. The wife lent the business funds and was repaid all but a small sum. The failure of the building installation business should not be attributed to the husband alone. I am satisfied that he did what he could to salvage the business. The business transitioned into a new entity with a greater focus on electrical installation using the same customer base, telephone number and premises.
Each of the parties cared for their own children and no doubt provided some support for each other’s children, although this is not a significant factor. When their own child was born, the wife took on a greater parenting role and reduced her hours in the business. It is likely that the wife’s role as homemaker and parent exceeded that of the husband at least for the two years after the child was born.
In 2015, the wife became very ill and the husband provided significant assistance in her care and his role as homemaker and parent no doubt increased significantly during this difficult time.
After separation, both parties contributed to the continuing operation of the business until September 2019 and since then the husband has been running the business without input from the wife. The husband has had the benefit of continuing to receive an income and other benefits from the business and has had the advantage of being able to provide employment to his current partner who is paid $51,000 per annum. The husband has also had the use of the business premises rent free since September 2019 as he ceased to pay the monthly rent of $5,000 plus GST and outgoings of $7,741 to the wife who owns the BB Street premises. The wife received $2,000 per week from S Pty Ltd during the period September to December 2019.
The wife transferred $382,699 to her mother over the period October 2016 to January 2017 without consultation with the husband. It appears that the wife anticipates this sum being returned to her at some future time. The wife’s parents advanced $99,000 to the wife for the purchase of STCs, which she has not been required to repay.
Overall, I consider that contributions should be assessed as favouring the wife in the proportion 60/40.
s 75(2) factors
The husband intends to continue to operate the S Pty Ltd business but intended to vacate the BB Street property by 31 July 2020. The premises attract a rent of $60,000 per annum. The wife will retain the BB Street property. The wife also has administrative skills and an acknowledged earning capacity in that field.
The husband’s earning capacity is in the vicinity of $120,000 per annum.
It is common ground that there is a slight disparity in earning capacities favouring the husband.
The child lives for a greater amount of time with the wife but spends substantial and significant time with the father. The current child support assessment is for the husband to pay the wife $348 per month, although no child support is currently paid. It is suggested that the calculation of the child support assessment reflects an incorrect assumption that the child lives 100 percent of the time with the wife. The husband pays $154 per week child support for his two other children.
Both parties are currently in reasonably good health.
Having regard to the agreed balance sheet and my assessment of contributions, it is likely that each party will be in a reasonable financial position at the conclusion of these proceedings.
Conclusion – what property order is appropriate
I consider that a division of the property in the proportion 60/40 in favour of the wife properly recognises the myriad of contributions made by each party and none of the factors in s 75(2) call for any adjustment to that proportion.
The parties agree about certain orders and property to be retained by each of them. In particular, the wife will retain the MM Street property and the BB Street property and the husband will retain the business and the M Street property. Each will retain their superannuation benefits and remain responsible for the debt secured on the respective properties to be retained by them. It is also agreed that the wife will retain the motor vehicle 2. The motor vehicle 2 was apparently acquired after the valuation of S Pty Ltd by the single expert and, in the absence of any valuation, neither party sought any monetary adjustment in relation to the wife’s retention of this vehicle.
The wife wishes to retain a motor vehicle 1 which is an asset of S Pty Ltd. Using a nett asset backing methodology, the single expert valued S Pty Ltd at $187,500 (recognising the existence of loans to the husband and wife) and for the purposes of his calculations he included the motor vehicle 1 at a value of $45,950 and deducted the outstanding finance of $2,253. The wife argues that there should be no adjustment to the value of S Pty Ltd in the husband’s hands despite her retention of the motor vehicle 1 or if there is it should be $5,000. I reject that submission. If the wife elects to retain the motor vehicle 1, I propose to reduce the value of S Pty Ltd in the husband’s hands by the value utilised by the single expert for it and attribute that value to the wife’s side of the ledger. The husband will remain liable for the balance of the finance and should pay that out before the vehicle is transferred to the wife, if she elects to retain it.
The overall division of property is reflected in the table below:
Property
Wife
Husband
MM Street, Suburb B
1,250,000
BB Street, Suburb D
900,000
M Street, Suburb N
950,000
C Company
25,000
S Pty Ltd
141,550[16]
motor vehicle 3
45,950[17]
Westpac Bank a/c #…76
500
ANZ Bank a/c #…29
3
ANZ Bank a/c #…92
193
ANZ Bank a/c #…12
182,323
ANZ Bank a/c #…54
54
G Bank a/c #…99
2,635
Westpac Bank a/c #…94
43
Add backs
Legal fees
91,702
Legal fees
68,867
Liabilities
Q Limited
(532,334)
ANZ investment loan
(531,692)
Superannuation
Z2 Pty Ltd ATF P Super Fund
94,990
198,386
Cash payment
(280,420)
280,420
Total
$1,732,903
$1,155,267
Percentage distribution
60%
40%
I consider a differential of $577,636 as between the parties to be a just and equitable outcome in the circumstances of this case.
I certify that the preceding seventy-six (76) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carew delivered on 24 August 2020.
Associate:
Date: 24.08.2020
[1] See paragraph 58 of exhibit 13 (final submissions dated 29 May 2020) and exhibit 14 for the terms of the final order sought.
[2] See paragraph 2 of exhibit 12 (final submission dated 29 May 2020) and exhibit 14 for the terms of the final order sought.
[3] This is a reference to the Full Court authority of Kennon & Kennon (1997) FLC 92-757 where the Court identified the principles applicable if conduct is to be relevant in property settlement cases.
[4] (2012) 247 CLR 108 (“Stanford”).
[5] Ibid at 122, [42].
[6] Ibid.
[7] Ibid.
[8] The agreed balance sheet referred only to the wife’s shares in S Pty Ltd rather than the assets beneficially owned by the Jian Family Trust and the impact of the related party loans as valued by the single expert UU Accountants. The entry has been amended to accord with the description in the valuation.
[9] During submissions the wife’s counsel suggested that the wife’s initial contributions were $2,162,087.
[10]Jones v Dunkel (1959) 101 CLR 298.
[11] It was conceded by the wife’s counsel during submissions that in the absence of valuation evidence at November 2008 the Court should have regard to the purchase price of the property in 2005, namely, $485,000 less borrowings of $150,000. Thus a net value of $335,000.
[12] If the concession by the wife’s counsel as to the value to be attributed to the wife’s property at KK Street is substituted then the initial contributions as claimed by the wife in the table set out above decreases to $1,696,092.
[13] (1999) FLC 92-844.
[14]Jones v Dunkel (1959) 101 CLR 298.
[15] See for example Horrigan & Horrigan [2020] FamCAFC 25 at [35] and the cases referred to therein.
[16] This will be adjusted by adding $49,950 if the wife elects not to retain the motor vehicle 1.
[17] If the wife elects to return this vehicle to the Husband, the balance of the assets retained by her will reduce by this value and the husband’s will correspondingly increase.
Key Legal Topics
Areas of Law
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Administrative Law
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Immigration
Legal Concepts
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Judicial Review
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Procedural Fairness
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Natural Justice
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Jurisdiction
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