Kaderas and Kaderas

[2019] FCCA 3550

FEDERAL CIRCUIT COURT OF AUSTRALIA

KADERAS & KADERAS [2019] FCCA 3550

Catchwords:
FAMILY LAW – Property – contributions – funds provided by the Wife’s mother – future needs – wastage arguments over gambling – justice and equity.

Legislation:

Family Law Act 1975 (Cth), Pt.VIII, ss.79, 79(2), 79(4), 79(4)(e), 117(2)

Cases cited:

Stanford v Stanford [2012] HCA 52

Applicant: MR KADERAS

Respondent: MS KADERAS

File Number: MLC 3184 of 2019

Judgment of: Judge Carter

Hearing dates: 16 October 2019 & 26 November 2019

Date of Last Submission: 26 November 2019

Delivered at: Melbourne

Delivered on: 6 December 2019

REPRESENTATION

Counsel for the Applicant: Mr Mort

Solicitors for the Applicant: Morgan Legal

Counsel for the Respondent: Ms Hannan

Solicitors for the Respondent: Pearsons Lawyers Pty Ltd

ORDERS

1. All previous orders be discharged.

2. Within 60 days of the date of these orders (“the date”), the Wife pay to the Husband the sum of $66,599 (“the payment”).

3. Contemporaneously with the payment:-

   (a)the Husband do all such acts and things and sign all such documents as may be necessary to transfer to the Wife, at her expense, all of his right, title and interest in the property situated at and known as Street A, Suburb B in the State of Victoria (“the Street A, Suburb B property”);

   (b)the Wife shall be responsible for and indemnify the Husband against all payments and liability pursuant to the mortgage registered on the Street A, Suburb B property, and shall discharge and refinance the mortgage into her sole name;

   (c)the Wife do all such acts and things and sign all such documents as may be necessary to transfer to the Husband, at his expense, all of her right, title and interest in the property situated at and known as Street C, Suburb B in the State of Victoria (“the Street C, Suburb B property”); and

   (d)the Husband shall be responsible for and indemnify the Wife against all payments and liability pursuant to the mortgage registered on the Street C, Suburb B property, and shall discharge and refinance the mortgage into his sole name.

4. In the event the payment has not been made by the date, the parties do all such acts and things as may be necessary to forthwith place the Street A, Suburb B property on the market for sale on the following terms and conditions:-

   (a)the real estate agent be as agreed within 14 days of the date, and failing agreement, as nominated by the President of the Real Estate Institute of Victoria or their nominee; and

   (b)the sale be conducted on such terms and on such conditions as agreed upon by the parties at the direction of the real estate agent, and failing agreement, the parties have liberty to apply to the Court in relation to the terms and conditions of sale.

5. The proceeds of sale of the Street A, Suburb B property be applied as follows:-

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

   (b)secondly, to discharge any outstanding rates or any other encumbrance secured over the property;

   (c)thirdly, the balance of the payment outstanding as at the date of the settlement of the sale to be paid to the Husband, together with penalty interest as prescribed in the Family Law Rules 2004 (Cth); and

   (d)finally, the balance then remaining to the Wife.

6. The Wife shall retain for her own use and benefit, and the Husband relinquishes all his right, title and interest in:-

   (a)the Motor Vehicle D;

   (b)all shares in her name;

   (c)her personal possessions and funds in any bank account in her name or control; and

   (d)any superannuation entitlements in her name.

7. The Husband shall retain for his own use and benefit, and the Wife relinquishes all her right, title and interest in:-

   (a)the Motor Vehicle E;

   (b)the Motor Vehicle F;

   (c)the motorbike;

   (d)his personal possessions and funds in any bank account in his name or control; and

   (e)any superannuation entitlements in his name.

8. Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:-

   (a)each party be solely entitled to the exclusion of the other any other property (including choses-in-action) owned by or in possession of such party as at the date of these orders (the furniture, personal possessions and like chattels in the Street A, Suburb B property being deemed to be in the possession of the Wife, and the furniture, personal possessions and like chattels in the Street C, Suburb B property being deemed to be in the possession of the Husband);

   (b)monies standing to the credit of the parties in any joint bank account are to be divided equally between the party and thereafter any such account be closed;

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

   (d)each party retain for their sole use and benefit their superannuation entitlements;

   (e)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and

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

9. All extant applications are dismissed and the matter removed from the list of pending cases maintained by the Court.

AND THE COURT NOTES THAT:

A.The Court is satisfied that the final property orders are a just and equitable division of the property in these proceedings.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 3184 of 2019

MR KADERAS

Applicant

And

MS KADERAS

Respondent

REASONS FOR JUDGMENT

Introduction

1. The parties in this matter are unable to agree as to an appropriate division of their property following a 25 year marriage. The major areas of disagreement which have prohibited the parties from otherwise resolving their dispute are:-

   a)the weight to be given to the funds provided to the Wife by her mother during the relationship;

   b)the quantum of the Husband’s initial contribution and the weight to be given to it;

   c)the weight to be given to the Wife’s initial contribution;

   d)whether either party engaged in gambling, and if they did, whether there should be an adjustment in the other’s favour as a result;

   e)the appropriate adjustment on the basis of the Wife’s future needs; and

   f)whether the amount of $71,600 the Wife says she owes to her mother for legal fees on her behalf should be included as a liability and taken into account when determining the pool of assets to be divided.

2. The Husband proposes that overall, the adjustment of the non-superannuation pool on the basis of contributions should be 52.5% to the Wife and 47.5% to the Husband. The Wife contends an appropriate adjustment is a division of 60% to 40% in her favour.

3. The parties agree that the Wife’s future needs are greater than the Husband’s. The Husband proposes there should be a further 5% adjustment to the Wife, bringing her overall adjustment to 57.5%. The Wife proposes there should be a further 10% adjustment in her favour, resulting in an overall division of the non-superannuation assets to 70% to 30% in her favour.

4. The parties agree that the Wife shall retain the former matrimonial home situated at and known as Street A, Suburb B in the State of Victoria (“the Street A, Suburb B property”). They also agree that the Husband shall retain the parties’ investment property at Street C, Suburb B in the State of Victoria (“the Street C, Suburb B property”). In addition, the Husband seeks the Wife pay him the sum of $118,451, which he says results in the percentage division contended by him. On my calculations, he would actually need a cash payment of approximately $138,000 to achieve his proposed outcome.

5. Conversely, the Wife seeks the Husband pay her the sum of either $60,600 or $82,028, to give her the 70% of the pool she proposes. The different cash amounts depend upon how the alleged debt to her mother is treated.

6. The parties agree there does not need to be a superannuation splitting order as they have very similar amounts in their respective funds.

Background

1. The parties are both 53 years of age. They were married in 1993 and have two adult sons. They separated in July 2018. 

2. The Husband is currently employed as a labourer, earning approximately $100,000 per year.

3. In February 2019, the Wife was diagnosed with an aggressive, locally advanced breast cancer. She was promptly enrolled in a clinical trial at the Peter MacCallum Cancer Centre and commenced chemotherapy treatment.

4. Simultaneously, these proceedings were issued by the Husband, who filed his Initiating Application on 26 March 2019.

The relevant legal principles

1. This application is brought pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”). Both parties seek that I adjust their interests in their assets, liabilities and financial resources.

2. Pursuant to section 79(2) of the Act, before making an order altering the interests of the parties to a marriage in property, I must be satisfied it is just and equitable for me to do so.

3. The High Court in Stanford v Stanford [2012] HCA 52 (“Stanford”) made it clear that I cannot conflate my determination pursuant to section 79(2) of the Act with my determination pursuant to section 79(4) of the Act. These are separate enquiries and I must not start with an assumption that one party or the other has the right to have the property divided between them.

4. In these proceedings, both of the parties urge the Court that it is just and equitable that orders be made to alter their interests in their property. It is not sufficient that the parties simply agree that there should be an order made pursuant to section 79 of the Act. I must be satisfied myself that such orders are appropriate.

5. Each party is currently occupying one of the properties they own, to the exclusion of the other. Further, the Street C, Suburb B property, occupied by the Husband, is subject to a mortgage in the parties’ joint names. In my view, this is one of the “vast majority of cases” referred to by the plurality in Stanford, in which the requirements of section 79(2) of the Act are fairly readily satisfied. It is plainly just and equitable to make an order pursuant to section 79 of the Act in these proceedings for a division of property between the parties.

Assets, liabilities and financial resources as at the date of Final Hearing

1. To their credit, the parties largely resolved the issues regarding their assets and liabilities. As at the hearing, it was agreed the parties had the following assets and liabilities:-

Street A, Suburb B	$1,025,000
Equity in Street C, Suburb B, valued at $695,000, subject to a mortgage of ($192,449)	$502,551
Wife’s Motor Vehicle D	$26,000
Wife’s shares	$990
Husband’s Motor Vehicle E	$5,000
Husband’s Motorbike	$4,800
Husband’s Motor Vehicle F	$25,000
TOTAL NON-SUPERANNUATION ASSETS	$1,589,341

1. The parties referred during the trial to the Street A, Suburb B property being unencumbered. I note the Wife’s Amended Response refers to there still being a mortgage attached to that property. I have proceeded on the basis that there is nil owing on that mortgage as that was the position of both parties during the Final Hearing.

2. The Wife otherwise abandoned her arguments regarding potential add-backs and the Husband abandoned his argument regarding funds owed to his parents.

3. The only disputed issue is whether the Wife’s alleged loan from her Mother of $71,600, which the Wife says she has applied to her legal fees, should be included as a liability when determining the appropriate overall property settlement.

4. The parties agree their superannuation entitlements are:-

   a)$143,099 in the Husband’s name; and

   b)$148,087 in the Wife’s name.

5. There is no proposal by either party for a superannuation splitting order given the relatively equal figures of their superannuation entitlements.

Section 79(4) of the Act

Initial contributions

1. The Husband owned a property at Suburb G at the commencement of the relationship. The equity in the property was described by him at trial as being $86,000. In his earlier affidavit material, he said the equity was $60,000. Given the length of the parties’ marriage, little turns on whether the equity was $60,000 or $86,000.

2. The Wife owned a property at Suburb H, with an agreed equity of approximately $130,000. This property was rented out until approximately March 2000. The proceeds of sale were then applied towards the purchase of the land and the build of the home on the Street A, Suburb B property.

Contributions during the marriage

1. Other than the allegations each party makes regarding the other’s gambling, it is common ground the parties worked hard and contributed to the best of their abilities.

2. Shortly after the parties were married, the Wife received a redundancy of $25,000. She contributed those funds to the marriage.

3. During the course of the relationship, the parties engaged in a fairly traditional division of labour, with the Husband as the primary income earner and the Wife providing the bulk of parenting and homemaker duties.

4. The Husband has worked full time throughout the course of the marriage. The Wife was predominantly engaged in caring for the children, but was engaged in paid employment for periods.

5. The Wife’s most recent employment was on a part time basis, as a customer service officer. She derived a very modest income of approximately $10,000 per annum for that work.

Funds from the Wife’s mother

1. The Wife deposes in her trial affidavit that in 2015, the Wife’s mother provided the Wife with the sum of $250,000. The Wife corrected this date during her evidence-in-chief as being December 2013 (“the 2013 payment”). The Wife used some of the funds from the 2013 payment, and subsequently repaid her mother $70,000 that she had not used.

2. The Wife deposes in her affidavit that she received a further sum from her Mother in 2017, in the sum of $300,000. Again, this date was amended during evidence-in-chief as a sum received in 2015 (“the 2015 payment”). The Wife used some of the 2015 payment and subsequently repaid $150,000 to her mother.

3. It is the Wife’s contention that accordingly, the family has had the net benefit of $330,000 by way of funds provided by her mother from the 2013 payment and the 2015 payment.

4. The Wife’s evidence is those monies were applied as follows:-

   a)$70,000 was spent on property renovations;

   b)$52,000 was used to purchase a motor vehicle for the Wife;

   c)$5,000 went to the children’s school fees and books;

   d)payment of the children’s HECS debts totalling $94,000;

   e)$25,000 was used to purchase a car for one of the children;

   f)dental work for the children; and

   g)the balance of the funds were used for living expenses, clothes, food and furniture.

5. The Wife was not seriously challenged in relation to how those funds were applied.

6. The Husband disputes that all of those funds can be treated as a contribution in the sense contemplated by section 79(4) of the Act. He says that only the funds spent on renovations are a relevant contribution. I do not agree with that contention.

7. Section 79(4) of the Act requires that the Court takes into account financial and non-financial contributions, to the acquisition, conservation or improvements of any property of the parties. It also requires consideration of contributions made to the welfare of the family constituted by the parties and any children of the marriage, and including any contributions made as homemaker or parent. The funds, according to the Wife, were used for a number of joint purposes, including renovations, school fees and books, living expenses, clothes and furniture. Some funds were also used to purchase a car for her.

8. Whilst the contributions were used partially for the benefit of the children over the age of 18, in the event the parties had used their own funds to meet the costs and expenses as set out in paragraph 38 of the Wife’s trial affidavit, there would have been a corresponding reduction in the equity currently available between them for division. In that sense, the funds from the Wife’s mother can be seen as being contributed indirectly to the parties’ property. I note, however, the parties may not have elected to use the funds in this way.

9. The Husband also received a gift of $20,000 from his parents in 2015. $14,000 of those funds were used to purchase the Husband’s motor vehicle, and the Wife contributed the balance towards the children’s HECS debts.

Gambling

1. Both parties assert the other has used funds for gambling. The evidence each party sought to adduce fell well short of satisfying me that there has been wastage.

2. The Wife simply asserted the Husband had used family funds for private purposes, including “excessive expenditure on gambling several hundred dollars per week on tattslotto [sic]”. There was no attempt by the Wife to quantify the funds she said were wasted. There was no evidence led to corroborate that assertion. There was no real pursuit of this assertion at trial. The Husband denied the allegation.

3. The Wife was cross-examined as to a number of cash withdrawals she made from her account between October 2013 and February 2019. She said she shopped most days. She said she drew additional cash at the conclusion of her supermarket shop and then used those monies to purchase additional items at the deli, butcher, greengrocer and the like. She said she also withdrew funds to provide money to the parties’ children, as well as using cash to purchase items that she then used in her employment. She denied that she used the monies to gamble. She said she and the Husband from time to time played the poker machines together but she did not do any gambling alone.

4. There was no attempt to quantify the funds the Husband asserted were wasted as a result of the alleged gambling. There was no corroborative evidence that demonstrated the funds withdrawn were then used other than as asserted by the Wife. The Husband did not, for instance, assert in his trial material that the Wife attended venues and gambled the monies. He did not mention the alleged gambling in his material at all. At best, Counsel for the Wife asserted the multiple cash withdrawals were “peculiar”, “curious” and “bizarre”. As I have already observed, the evidence falls well short of amounting to persuasive evidence of wastage.

The Wife’s legal fees

1. The Wife asserts she has borrowed the sum of $71,600 post-separation from her mother, which she has applied to legal fees. The Wife says this should be included as a liability when determining the appropriate property settlement.

2. I am not of the view that this is a liability to be treated as sought by the Wife. Firstly, I am not satisfied that the Wife’s mother requires that sum to be repaid. There was no evidence those monies were provided as loans or that they are required to be repaid. The Wife’s mother was not on affidavit. I note the Wife’s mother has previously provided the Wife with funds which the Wife described in her evidence as being gifted to her. She said whilst her mother had asked for the unspent monies to be returned, her mother also said she would give the money back to the Wife again when she asked for it. I was further told that if the Wife is required to pay the Husband monies as a result of any property settlement, her Mother will advance her the funds to do so. There was no suggestion that would be by way of a loan.

3. Including the $71,600 in the pool as a liability would effectively require the Husband to pay his own legal fees as well as contribute towards those of the Wife. I am not satisfied that this is a matter in which there should be any departure from the usual rule that each party bears his or her own costs in these proceedings. Having regard to the matters set out in section 117(2) of the Act, there appears no basis for me to do so on the evidence currently before the Court. The parties have conducted these proceedings efficiently, without issues regarding discovery or the like. As will become clear, neither party has been wholly successful. In terms of their financial circumstances, whilst the Husband is in paid employment, the Wife is receiving an adjustment in her favour of the property pool as a result. I do not know – and could at this time, not properly know – whether there were any offers made in writing.

Relevant considerations pursuant to section 79(4)(e) of the Act

1. As set out, the parties are both 53 years of age. Neither has commenced living with another person. The Husband is in paid employment, earning approximately $100,000 per annum. It is envisaged that his employment will continue, although the Husband says he is currently working additional hours to meet his obligations to pay spousal maintenance.

2. The Wife is not currently working due to her ill health. Her diagnosis with breast cancer has exacerbated her anxiety and depression, for which she is now medicated. The Wife relied on affidavits from her psychologist, Dr J and her breast oncology specialist Dr K, as to her health and capacity to work. Those affidavits and the reports attached thereto were not the subject of challenge. I accept the Wife’s evidence that she is currently unable to work, and that she is unlikely to be able to return to work for the foreseeable future.

3. Even when she was in good health, the Wife’s income earning capacity was very modest. She was not in paid employment for many years following the birth of the children, and had recently returned part time to the work force. She earned approximately $10,000 per annum. She does not have any formal qualifications or skills.

Assessment of contributions and prospective needs

1. In determining what orders to make, I must weigh and assess all of the parties’ contributions of all kinds and from all sources that each made during the relationship. This is a holistic, and not a mathematical exercise.

2. Taking all of the competing contributions into account, and doing my best to give proper weight and value to all of the elements that went into the entirety of the parties’ marriage as I have already set out, I assess the parties’ contributions to the non-superannuation pool as being 45% by the Husband and 55% by the Wife. That recognises the initial contributions by both parties, the redundancy monies received by the Wife, as well as the additional contributions from their families made over the years. I note in particular that the contributions from the Wife’s mother were significant. This assessment also takes into account the efforts made by the parties, both financial, and non-financial, and as homemakers and parents over the 25-year relationship.

3. It is appropriate there be a further 7% adjustment in favour of the Wife when taking into account the parties’ future needs. That brings the division of the overall non-superannuation asset pool to 62% to the Wife and 38% to the Husband. That further adjustment is warranted in particular on the basis of the disparity in the parties’ income earning capacity. I note the Wife has no significant skills or qualifications, and is currently, and for the foreseeable future, unable to work as a result of her diagnosis and treatment. Even when she was working, she was earning a very modest income.

4. On the basis that the parties retain the houses in which they are currently residing, with the Husband taking over the mortgage encumbering the Street C, Suburb B property, the Wife will need to pay the Husband the sum of $66,599.

Superannuation

1. The parties have agreed they will each retain their superannuation entitlements, as they are substantially equal. This is an appropriate and sensible approach.

2. For all of the foregoing reasons, I make the orders as are set out.

I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of Judge Carter

Date:  6 December 2019