KALINE & CHANCE
[2010] FMCAfam 1342
•9 December 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KALINE & CHANCE | [2010] FMCAfam 1342 |
| FAMILY LAW – Property settlement ─ where parties entered into informal agreement at the time of separation ─ where parties disagree as to the terms of the informal agreement ─ where the informal agreement has been implemented ─ where husband asserts that wife holds property purchased pursuant to informal agreement on trust for herself and the parties' child ─ where wife asserts that the child has no beneficial interest in property purchased pursuant to the informal agreement ─ consideration of approach to be adopted where parties enter into an informal property settlement agreement ─ consideration of the informal agreement as an indication of what the parties may have regarded as just and equitable at the time of separation ─ consideration of contribution and section 75(2) factors at the time of the informal agreement in order to provide a background to the parties' understanding of what they considered was a just and equitable settlement at that time ─ consideration of contribution and other factors relevant after the making of the informal agreement ─ determination of property settlement application on the basis of contribution and section 75(2) factors in existence at the time of hearing. |
| Family Law Act 1975 (Cth) |
| B & B (2006) FamCA 883 Clauson (1995) FLC 92-595 C v C (2005) FLC 93-220 Ferraro (1993) FLC 92-335 Hickey (2003) FLC 93-143 Lee-Steere (1985) FLC 91-626 McMahon (1995) FLC 92-606 at 82,043 Pastrikos (1980) FLC 91-987 Pierce (1998) 24 FamLR 377 Whitely (1996) FLC 92-684 Williams (2007) FamCA 313 |
| Applicant: | MR KALINE |
| Respondent: | MS CHANCE |
| File Number: | MLC2067 of 2009 |
| Judgment of: | Walters FM |
| Hearing date: | 24 November 2010 |
| Date of Last Submission: | 24 November 2010 |
| Delivered at: | Melbourne |
| Delivered on: | 9 December 2010 |
REPRESENTATION
| Solicitors for the Applicant: | Unrepresented |
| Solicitors for the Respondent: | Unrepresented |
ORDERS
The wife must pay to the husband the sum of $13,386.50 (“the payment”) on or before 30 April 2011.
The husband must forthwith remove any caveat that he may have lodged over the property situated at Property G in the State of Victoria (“Property G”), save for any caveat lodged for the sole purpose of securing the payment.
The husband must remove any caveat lodged against Property G for the purpose of securing the payment immediately upon receipt of the payment.
The wife retain the following as her sole property::
(a)Property G;
(b)her motor vehicle;
(c)the furniture, chattels and effects presently in her possession;
(d)all moneys standing to her credit in any account in any bank, building society or other financial institution; and
(e)her superannuation entitlements.
The husband retain the following as his sole property:
(a)his motor vehicle;
(b)the furniture chattels and effects presently in his possession;
(c)all moneys standing to his credit in any account in any bank, building society or other financial institution; and
(d)his superannuation entitlements.
All extant applications otherwise be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Kaline & Chance is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC2067 of 2009
| MR KALINE |
Applicant
And
| MS CHANCE |
Respondent
REASONS FOR JUDGMENT
Introduction
Before the court are the parties’ competing applications for property settlement. Somewhat surprisingly, neither party initially accepted the proceedings as relating to property settlement in the sense that such proceedings are usually categorised in Family Law. The husband argued from the outset that he sought no financial benefit for himself. He wanted no more and no less than that the Court recognise and legally enforce what he alleged was the beneficial entitlement of the parties’ only child, [X], to be registered as a co-owner with the wife of the home in which the wife and [X] currently live. It was the husband's case that he and the wife had reached agreement at the time of separation, some six years ago, to the effect that [X] and the wife were to be the co-owners of the property, and that the wife had reneged on that agreement.
The wife strenuously denied that any such agreement ever existed. She argued that her home was hers and hers alone, and that [X] has no legal or equitable interest in it. The only substantive orders that she sought were to the effect that the husband's application be dismissed. As far as she was concerned, the parties had implemented an agreed property settlement shortly after they separated, and the husband had no business seeking to reopen the arrangement that had been agreed upon.
I have concluded that the parties reached agreement in the terms described by the wife, but that the agreement was not and is not binding on them. In those circumstances, the agreement, its background, its intended effect and its implementation are relevant factors for the Court to consider, but they do not determine the dispute now before the Court.
At the end of the day, and for the reasons set out below, I have concluded that the wife must pay the husband a relatively modest amount by way of property settlement. I am not persuaded that [X] has or ever had any legal or equitable interest in the home owned by his mother.
The parties were self-represented
Given that the parties were self-represented, I was very conscious of the obligation upon the Court to provide a fair trial – for both parties.
I am aware of the guidelines regarding the manner in which a judicial officer should deal with unrepresented litigants, and the associated discussion contained in Re: F – Litigants in Person Guidelines (2001) FLC 93-072.[1] I applied those guidelines during the course of the proceedings, and am comfortable that the trial was indeed fair. In summary:
a)Procedural fairness was afforded to both parties.
b)The “mechanics” of the trial, and the right of each party to cross examine the other (and to call witnesses or otherwise adduce evidence), were explained to them.
c)Other relevant procedures were explained to the parties as they arose.
d)I explained to the parties that they had the right to object to inadmissible evidence, and explained to them – in very broad terms – the types of evidence that might be considered inadmissible.
e)Where appropriate, I attempted to clarify the substance of each party’s submissions, and did my best to draw attention to the law to be applied in determining the issues.
f)Where appropriate, I took steps as authorised by the Full Court in Guideline #9 in paragraph 253 of the decision in Re: F – Litigants in Person Guidelines.
[1] See, in particular, paragraphs 209-253 of the decision.
In Saxena (2006) FLC 93-268, Coleman J emphasised that the type of guidelines set out in the previous paragraph are “no more than the name implies” and that they “derive from the broader considerations of natural justice, implicit in which is the recognition that for a litigant in person to be afforded natural justice and procedural fairness, that litigant must have some appreciation of just what is going on”. His Honour added that the Court must be concerned with “the spirit rather than the strict letter of the guidelines”.
I have no doubt that both parties fully understood exactly "what was going on" at all times during the course of the trial.
It needs to be added that these proceedings had been in my docket since their inception, and that the parties had appeared before me on a number of occasions prior to the trial. On every occasion that they appeared before me without legal representation, I urged them to obtain such representation and, where appropriate, referred them to the duty lawyers in the court precincts.
Background
In these Reasons, and unless otherwise indicated, all statements of fact comprise findings of fact.
The husband was born in 1954. He is now 56. The wife was born in 1974. She is now 36.
The parties were married in Malaysia in 1998. They did not live together prior to that time.
It was the husband's second marriage, and the wife's first. The husband has two children of his first marriage, who then lived with his first wife.
The husband has lived in Australia for many years. The wife commenced living in Australia in April 1999, approximately 12 months after the marriage. She gave up her Malaysian citizenship, and became an Australian citizen, in March 2006.
Separation occurred in November 2004.
There is one child of the marriage -- [X], who was born [in] 1999.
A decree nisi of dissolution of marriage was granted on 2 February 2006. It became absolute one month later.
Final parenting orders relating to [X] were made, by consent, on 1 February 2010 ("the February 2010 orders"). In broad terms, the February 2010 orders provide for the parties to have equal shared parental responsibility for [X], and for him to live with the wife. The husband is to spend time with [X] on alternate weekends, and for four or five hours on each Monday and Thursday afternoon/evening. The husband is also to spend time with [X] for half of all school holidays.
I do not propose to traverse the entire history of the parties’ litigation in this Court. Suffice it to say that the proceedings began in March 2009 and initially involved significant disputes regarding the parties’ arrangements for [X]. Among many other documents, the husband filed a notice of risk of abuse and a contravention application (in June 2009). An independent children's lawyer was appointed on 22 June 2009, and a family report was released on 1 December 2009. The independent children's lawyer consented to the February 2010 orders.
Three of the February 2010 orders were not made by consent:
a)The wife had applied to discharge an airport watch list order made at an earlier stage of the proceedings. She was unsuccessful in that regard, and the airport watch list order remained in force.
b)The husband had applied for an injunction restraining the wife from changing [X]'s principal place of residence. He was unsuccessful in that regard, and his application for the injunction was dismissed.
c)The wife was ordered to provide the husband with not less than 60 days notice in writing of any intention that she may have to change [X]'s principal place of residence.
The independent children's lawyer did not remain in the proceedings after the making of the final parenting orders.
The property proceedings commenced with the husband's application (filed in August 2009) seeking leave to commence such proceedings out of time, pursuant to section 44(3) of the Family Law Act. The wife opposed the granting of such leave.
On 3 May 2010, the husband was granted leave under section 44(3) to proceed with his property settlement application.
Documents relied upon
The husband relied upon the following documents at trial:
a)his amended initiating application filed 15 March 2010;
b)his affidavit sworn 12 March 2009;
c)his affidavit sworn 9 April 2009;
d)his affidavit sworn 23 April 2009;
e)his affidavit sworn 3 August 2009;
f)his affidavit sworn 15 March 2010; and
g)his financial statement sworn 26 May 2010.
The wife relied upon the following documents at trial:
a)her amended response to initiating application filed 2 August 2010;
b)her affidavit sworn 18 May 2009;
c)her affidavit sworn 7 September 2009;
d)her affidavit sworn 22 September 2009;
e)her affidavit sworn 28 July 2010; and
f)her financial statement sworn 25 May 2010.
The husband also relied on two documents tendered in evidence during the course of the trial, being a statutory declaration by Mr M (dated 19 November 2010) and the parties’ application for divorce (filed 14 December 2005). The documents comprised exhibits H1 and H2 respectively.
Relevant financial history
The husband's work history is unclear. In an early affidavit, he said that he was "usually self employed as a casual [omitted". According to the wife, the husband has been unemployed for approximately 10 years, although he may have worked casually from time to time during that period.
The parties met in or about December 1997 in Singapore, when the husband was in his early 40s and the wife was in her early 20s. The wife was then working as a [omitted]. She was a permanent resident of Singapore. The husband had lived in Australia for an extended period.
The wife remained living in Singapore for approximately 12 months after the marriage.
At the commencement of cohabitation, the husband owned a house at Property W ("Property W"). He also owned land in Property A, Western Australia ("the WA land")..
The parties lived in Property W from the time that the wife arrived in Australia (in approximately April 1999) until they separated in November 2004 (although, as described below, the wife lived with [X] in Singapore for approximately 13 months during that period).
In January 2001, the wife left Australia and returned to Singapore. She took [X] with her. In paragraph 8 of her affidavit sworn 18 May 2009, she said -- and I accept -- that she left Australia (with [X]) with the husband's knowledge and consent. She and [X] remained living in Singapore for approximately 13 months. During that time, the wife worked for approximately 6 months to support herself and [X]. As a result of the husband's persistent requests for her to do so, she returned to Australia in February 2002.
The wife asserts, and I accept, that she managed to save approximately $10,000 during the time that she lived in Singapore with [X]. She also asserts, and again I accept, that those moneys were provided to the husband upon the wife's return to Australia and used by him to establish a small business.
The parties separated again in November 2004. This time, they did not reconcile.
According to the wife, she travelled overseas with [X] on a further occasion – in December 2005. She said that she travelled with the husband’s knowledge and consent.
Shortly after the parties’ final separation in November 2004, the wife purchased a property at Property G ("Property G)". The precise circumstances surrounding the purchase of Property G are less than clear, and the parties dispute both the intention behind its acquisition and its beneficial ownership. Suffice it to say at this stage, however, that I prefer the wife's evidence in relation to these matters where such evidence conflicts with that of the husband.
On or about 9 December 2004, the husband provided $110,000 to the wife. It seems that he borrowed this sum against his interest in Property W -- by increasing his liability under the mortgage then encumbering that property.
Annexure KSC1 to the wife's affidavit sworn 28 July 2010 comprises a copy of a statutory declaration made by the husband 9 December 2004. The operative part of the statutory declaration is as follows:
I would like to make a gift of $110,000 lump sum to (the wife) for purpose of property investment for her future. I do not want nor ask for any refund of above amount.
During the course of his oral evidence, the husband admitted making the above statutory declaration. He said that its purpose was to assist the wife to borrow sufficient funds to complete the purchase of Property G.
Doing the best that I can with the evidence available to me, it would appear that the purchase price of Property G was approximately $310,000 (including stamp duty). The wife used $80,000 of the $110,000 provided to her by the husband in December 2004, and borrowed the balance of $230,000 from Perpetual Trustees Australia Ltd.
In approximately May 2005, the husband sold the WA land. The precise amount that he received pursuant to the sale is unclear, but it would appear that he paid the wife $40,000 from the sale proceeds on or about 4 May 2005.
According to the wife, the husband later paid her a further $10,000. I assume that this payment was made shortly after the wife received the $40,000 from the sale of the WA land.
It follows from the above that the husband paid the wife a total of $160,000 between December 2004 and May or June 2005. The wife used all or almost all of these moneys to purchase Property G, and to reduce the mortgage secured against it.
At the time of separation (in November 2004), the husband retained Property W (which was encumbered by a mortgage in respect of which a relatively modest amount was owing), the WA land and his "business" (details of which were never provided – by either party), including a van which was then approximately one year old. As indicated above, the mortgage encumbering Property W was increased to facilitate the husband's payment of $110,000 to the wife in December 2004, and the WA land was sold in mid 2005.
The husband did not sell Property W until 2006, after the parties’ divorce was finalised -- although it seems that he had the property on the market for an extended period. He retained the net proceeds of sale (after the discharge of the mortgage), which appear to have been modest. Since that time, he has lived in rented accommodation.
The husband did not provide any (or any adequate) evidence regarding the sale of either Property W or the WA land. For example, the settlement statements were never presented to the Court. I am unable to make clear findings, therefore, as to the precise amounts that he received as a result of those sales. Nor am I able to make clear findings as to the sale prices of the two properties. I note, however, that the husband referred to the sale of these properties in Part M of his financial statement sworn 26 May 2010 – where he said that he received $159,000 for Property W and $47,000 for the WA land.
After the wife purchased Property G, she made all payments in respect of the mortgage encumbering it. Further, the husband paid no child support for [X]. With effect from late 2006, however, the husband commenced paying [X]'s school fees at [omitted] College, and later at [omitted] School. The husband has continued to pay all [X]'s school fees. The husband also met some fairly modest additional expenses associated with [X]'s educational or sporting activities. In addition, he provided the wife with a refrigerator and contributed towards the cost of a cooling system and satellite dish for Property G.
Since the date of separation, the husband has -- to all intents and purposes -- been unemployed. He is currently on a disability pension, although no evidence was presented to the Court regarding the basis upon which he has an entitlement to such a benefit. The wife worked on a part-time basis as a [omitted]. At the same time, she studied to become a [healthcare professional].
The wife qualified as a [healthcare professional] in mid 2009 and continued to work in that capacity thereafter. She worked, and continues to work, on a part-time basis, at [omitted].
As indicated above, the parties dispute the circumstances surrounding and intention behind the acquisition of Property G, and the beneficial ownership of the property. These matters comprised the main issue at trial.
Property G
The husband lodged a caveat against Property G in March 2009. In broad terms, he alleged that [X] is entitled to a 50% share of Property G and that, in effect, the wife holds her interest in Property G on trust for herself and [X] as tenants in common in equal (or nearly equal) shares. The fact of the matter is, however, that the husband's various assertions regarding the circumstances in which he paid the total amount of $160,000 to the wife, and regarding the parties’ intentions at the time that the wife purchased Property G, were inconsistent, confusing and generally unpersuasive.
In paragraph 9 of his affidavit sworn 12 March 2009, the husband deposed as follows:
Upon separation, I gave the mother a lump sum of $160,000 toward the purchase of a family home for [X] to live in.
In paragraph 26 of his affidavit sworn 9 April 2009, the husband expanded upon the above statement. He deposed as follows:
At the time of the separation in November 2004, in order to provide the child with a secure and suitable accommodation, and after (the wife) decided to purchase her current house … I contributed a total of $160,000 towards the purchase of the house.
The husband added, however, that "it was agreed between (the parties) that I made the (total payment of $160,000) on behalf of the child, who, the parties both agreed, ought to be the co-owners (sic) of the said house".
For her part, the wife asserted that the parties reached an informal agreement in relation to property settlement at the time of separation. She said that the parties agreed that their assets would be divided on the basis of 60% to her and 40% to the husband. At that time, the relevant assets comprised Property W (which, according to the wife, the parties valued at approximately $200,000), the WA land (which, according to the wife, the parties valued at approximately $60,000) and the husband's "business" and relatively recently acquired van (which, according to the wife, the parties valued at approximately $20,000). The total value of those assets was $280,000. Consequently, the wife's 60% share should have amounted to approximately $168,000.
According to the wife, the payments from the husband of $110,000 in December 2004 and $40,000 in May 2005 comprised part payment of her 60% entitlement under the agreement that she said that the parties had reached at the time of separation. The later payment of $10,000 was "to pay me back his loan on my money saved in Singapore when (the parties were separated) for about 13 months", which loan was "taken by (the husband) in order to set up his business".[2]
[2] see paragraph 20 of the wife's affidavit sworn 18 May 2009
The wife readily conceded that she also agreed to care for [X] until he reaches the age of 18 and that, in essence, she agreed to ensure that he would always have "a roof over his head". She denied, however, that [X] was ever intended to have a formal or informal interest in Property G or any other property that she might be minded to purchase. According to the wife, the agreement that she reached with the husband was to the effect that she would receive 60% of the available assets on the basis that she would be primarily responsible for housing and maintaining [X] until he reaches the age of 18, and that she would not be receiving any child support from the husband at any time in the future. She denied that there was any agreement to the effect that she could not sell Property G until after [X] reaches the age of 18. She said that the agreement was to the effect that Property G was hers to do with as she saw fit, although she must always ensure that [X] is properly accommodated and cared for.
I shall refer to this agreement (which, of course, the husband describes very differently) as "the separation agreement".
I am conscious of the mathematical discrepancy in the wife's description of the separation agreement (in that, on her version, she should have received a further $18,000 over and above the amounts of $110,000 and $40,000 paid to her in December 2004 and May 2005, and, on her version, the $10,000 paid to her later amounted to repayment of a "loan", as opposed to a further part payment towards her 60% entitlement). Having seen and heard the parties, however, and having read all the affidavit material relied upon by them, I am satisfied that the wife's description of the separation agreement should be preferred to that of the husband. I find that the parties reached an informal agreement at the time of separation to the effect that the wife would receive approximately 60% of the assets then available for distribution between them on the following conditions:
a)she was required to care for and supervise [X] until he turns 18;
b)she was required to provide accommodation for [X] until he turns 18; and
c)the husband would not be required to pay child support for [X] at any time until he turns 18.
Further, I find that:
a)there was no agreement to the effect that the wife could not sell Property G, or otherwise relocate to alternative accommodation for herself and [X]; and
b)there was no agreement to the effect that [X] was to have a legal or beneficial interest (of any sort whatsoever) in Property G, or in any other accommodation acquired by the wife for herself and [X] to live in.
In relation to the husband's assertions regarding the ownership of Property G, and the conditions to which the wife had allegedly consented, I make the following observations:
a)I have already recorded the way in which the husband described the separation agreement in his affidavits sworn the 12th of March 2009 and 9 April 2009.
b)The husband did not sell Property W in order to provide the wife with $160,000. In fact, Property W was not sold until 2006. The $160,000 was paid to the wife in the manner described earlier in these Reasons.
c)In paragraph 12 of his affidavit sworn 3 August 2009, the husband said:
I gave her lump sum because of one decent solid statement "mother should be with the child in the family home for 18 years". I was so touched that I said name your price and she did and I obliged.
d)In my opinion, the above statement does not sit comfortably with the husband's description of the separation agreement. Further, in paragraph 13 of the same affidavit the husband sets out what appears to be an ex post facto description, analysis or justification of the various transactions that led to the wife receiving $160,000. Again, the table in paragraph 13 does not sit comfortably with the husband's descriptions of the alleged agreement elsewhere in the affidavit material.
e)In paragraph 31 of his affidavit sworn 3 August 2009, the husband deposed as follows:
… at the time of dividing the family assets the wife and I agreed on a three way equal share for all, including ([X]s) young 5 year old share. That is: $180,000 divided by three equals $60,000 each share with the mother and son having two thirds ($120,000) and dad one third share ($60,000). I was only concerned for ([X]’s) well-being and security and knew that the $120,000 in Eastern Suburbs would not be enough. I gave her the lot because she said it is for ([X]) and her in equal share (half and half) her exact words. $5,400 of the $160,000 that she eventually got was towards the money she put in for the business that in turn brought earnings to provide for the upkeep cost towards the family's expenses.
f)Clearly, the above description of the separation arrangement is at odds with other descriptions given by the husband elsewhere in his affidavit material. Again, Property W was not sold on until 2006 -- over a year after the purchase of Property G. On the husband's own version of events (as set out in the previous paragraph), "the lot" should have comprised $180,000 and not $160,000. Further, in paragraph 13 of the same affidavit the husband referred to the net sale price of Property W (after payment of the mortgage and agents fees) as being $159,000, and to the sale price of the WA land as being $40,000. If these figures are correct, then "the lot" should have comprised $199,000. As well, the alleged allocation of $5,400 (out of the total amount of $160,000) towards a repayment to the wife of moneys that she contributed to the husband's "business" conflicts with much of the husband's other sworn evidence.
g)In paragraph 3 of his affidavit sworn 15 March 2010, the husband deposed as follows:
(Property G) was purchased on 12 January 2005 with $160,000 brought in by [X] and the balance of $155,000 through (the wife's) mortgage loan where [X] had the right to live until lawful age of 18 and at the end of his high-school. … It was … agreed that [X]’s $160,000 investment in the family home paid by the father for [X] would entitle him to 50% ownership of the family home.
h)Again, the above description is clearly at odds with other descriptions of the separation agreement given by the husband in other affidavit material. As indicated above, the husband spoke elsewhere of an equal division of the then existing matrimonial property among himself, the wife and [X]. To suggest that the totality of the $160,000 received by the wife was "brought in" by [X], however, is to deny that any of that sum was intended for the wife beneficially.
i)Later in his affidavit sworn 15 March 2010, the husband endeavoured to construct an argument to the effect that [X] is entitled to a 51% share of Property G. Although the husband's description of the manner in which such an entitlement can be construed is difficult to comprehend, he is clearly asserting that [X] is entitled to a 51% share of the gross value of Property G. In other words, the implication is that the wife must pay out the mortgage from her 49% share of the gross value of the property.
j)Part of the husband's case was that the wife had acknowledged his version of the separation agreement in the application for divorce filed (by both parties) on 14 December 2005.
k)Paragraph 28 of the application for divorce (dealing with the housing arrangements for [X]) is as follows:
three bedroom unit -- child has own room -- as agreed will remain until 18 years (end of high school)
l)It was not in dispute that the words "three bedroom unit -- child has own room" were written by the wife at the time that she prepared the application for divorce. Nor was it in dispute that the additional words "as agreed will remain until 18 years (end of high school)" were added by a solicitor, Mr M. The husband asserted that the wife was present when Mr M added the words, that she consented to them and that they somehow confirmed the broader terms of the agreement which (according to the husband) the parties entered into at the time of separation. The wife said that:
i)the husband had contacted Mr M;
ii)the parties met Mr M at or outside a coffee shop in [omitted] for the purpose of having him witness the application for divorce;
iii)she had not previously met Mr M, had never instructed him to act for her and did not seek or obtain any legal advice from him (whether in relation to the alleged agreement, the application for divorce, Family Law matters generally or any other matters);
iv)she had no recollection of the words "as agreed will remain until 18 years (end of high-school)" being added to the application for divorce in her presence and did not know whether the words were included in paragraph 28 at the time that she signed the application for divorce in Mr M's presence; and
v)she accepted that, if asked by Mr M, she would have told him that she had agreed to care for and supervise [X], and to provide him with appropriate accommodation until he reaches 18, but she denied that she informed Mr M, or would ever have informed him, that [X] had a legal or beneficial interest in Property G in the manner asserted by the husband or in any other manner.
m)Exhibits H1 and H2 do not assist the husband. In particular, exhibit H1 (being Mr M’s statutory declaration) says nothing about the separation agreement as described by the husband (in any of its versions). Further, Mr M says nothing about the words added to paragraph 28 of the application for divorce -- which, the parties accepted, were written by him.
n)I accept the wife's evidence as described in the previous paragraphs. I find that the words which Mr M added to paragraph 28 of the application for divorce do no more than record the wife's acknowledgement that she had agreed to care for and supervise [X], and to provide him with appropriate accommodation, until he reaches 18.
Was the separation agreement a binding financial or final property settlement agreement?
Notwithstanding the fact that I have accepted the wife's evidence regarding the separation agreement, the Court is not precluded or from dealing with the issue of property settlement in the usual way. In other words, the separation agreement was neither final nor binding, and the Court retains both jurisdiction and power to apply the provisions of section 79 of the Family Law Act. The separation agreement is of historical interest in the context of the proceedings, but cannot exclude, impede or fetter the Court’s power to make such orders in relation to property settlement as it considers just and equitable.
Probably because she was not legally represented, the wife did not argue that the husband was in some way estopped from commencing or pursuing proceedings for property settlement. Quite apart from the fact that the wife has not clearly alleged that she acted to her detriment in reliance upon any relevant representation by the husband, however, the fact of the matter is that the Court’s jurisdiction to grant relief under section 79 can only be ousted by court order, or by a relevant, binding financial agreement. In this regard, I refer to the decision of the Full Court of the Family Court of Australia in Woodcock (1997) FLC 92-739, at 83,968.
Woodcock was considered by the Full Court in DW v GT (2005) FLC 93-217, which was, in turn, considered by the Full Court in Rollings (2009) 230 FLR 396; [2009] FamCAFC 87.
In DW v GT , the Full Court said (at paragraphs 38 and 39):
Where parties enter into an agreement concerning property, other than an agreement approved under the provisions of the Act or embodied in consent orders, and one party subsequently commences proceedings under s 79 for an alteration of property interests, the Court must determine the application on its merits having regard to the factors as set out in s 79(4) as they exist at the time of the hearing of the application under s 79 and according to the law in force at that time and not, as to either of those two matters, at the time the agreement was made. There is no threshold test, before embarking upon the s 79 exercise, to determine whether the earlier agreement was just and equitable at the time it was made according to the facts as they then existed and the law then in force. The earlier agreement should be considered (as an indication of what the parties may have regarded as just and equitable at the time), but its provisions only given effect if they coincide with an order which is just and equitable according to s 79 at the time of the hearing.
In determining s 79 applications in circumstances where there has been an earlier agreement, it will often be necessary to consider what was the value of the parties’ assets at the time of the agreement, what their various contributions were to that time, and what might have been an appropriate s 75(2) adjustment. A consideration of these matters might well be necessary in order to provide a background to the parties’ understanding of what was a just and equitable settlement at the time. However, and perhaps more significantly, it would generally be necessary for the Court to acquaint itself with changes in the composition and value of the property pool, so that post-separation contributions can be assessed.
In Rollings, the Full Court said (at paragraph 137):
… The fact that parties have reached agreement does not detract from the necessity of the Court determining any subsequent proceedings pursuant to s 79 in accordance with the criteria specified in the section. If an agreement has been put into effect there is no doubt that it “has become part of the financial history of the parties”. … However what further relevance an agreement or something that happened in furtherance of an agreement may have, would very much depend on the circumstances of the case. If however the agreement or something that happened in furtherance of the agreement was relevant, a court exercising jurisdiction under s 79 is not precluded from thereby considering the matters in that section. ... (Citations omitted)
I propose to consider the current proceedings in the light of the law as outlined above.
Orders Sought
Given that the parties were self represented, it is understandable that the precise orders that they sought were awkwardly drafted. In broad terms, the husband sought orders to the effect that the wife transfer to [X] a 51% share of the gross value of Property G (and that, in effect, the wife be responsible for the whole of the debt associated with the mortgage from her 49% share of Property G). Put another way, the husband sought orders to the effect that the wife transfer Property G to herself and [X] as tenants in common in the shares of 49% to her and 51% to [X], and that the wife pay the mortgage presently encumbering the property and indemnify [X] in respect thereof.
The wife sought that the husband's application be dismissed, and that he be ordered to remove the caveat lodged over Property G. In other words, she sought orders to the effect that she retain all the property presently in her name or in her possession (and that she be beneficially entitled thereto), and that the husband retain all the property presently in his name or in his possession.
Property Settlement – The Law[3]
[3] This generic summary of the law relating to property settlement is reproduced from my decision in the matter of Kernahan [2007] FMCAfam 952
The general approach that should be adopted by the court in relation to a property settlement application has been described in many cases[4]. The court must first identify the property of the parties. It must then attribute a value to each item of property – usually as at the date of the hearing. Thereafter, it must assess the extent of each party’s contributions under the various sub-headings described in section 79(4) of the Family Law Act. Finally, the court must consider the financial resources, means and needs of the parties, and the other matters set out in section 75(2) so far as they are relevant. An adjustment of the amount due to each party by way of contribution is then made by reference to the section 75(2) factors. It is not essential, however, that such an adjustment take place. Generally speaking, an adjustment is made because one party has greater needs and the other has stronger means.
[4] See, for example, Pastrikos (1980) FLC 91-987, Lee-Steere (1985) FLC 91-626, Ferraro (1993) FLC 92-335, Clauson (1995) FLC 92-595 and Whitely (1996) FLC 92-684
In relation to the contributions of the parties under section 79(4) generally, it has been held that a “global” approach will usually be more convenient than an “asset by asset” approach – although the application of an asset by asset approach does not (of itself) amount to an error of law[5].
[5] See Norbis (1986) FLC 91-712
The section 75(2) factors are related to the process of arriving at a just and equitable result. It follows that there may be circumstances in which the justice and equity of the case, and the specific provisions of section 75(2), support an adjustment in a party’s favour for matters which cannot comfortably be described as being of financial or economic significance[6].
[6] See McMahon (1995) FLC 92-606 at 82,043
Under section 79(2), the court is required to be satisfied that the property settlement orders that it proposes to make are just and equitable – and not simply that the underlying percentage division of the net value of the parties’ property is appropriate. In other words, in the consideration of whether the overall result of property settlement proceedings is just and equitable, it is the justice and equity of the actual orders, and not of the percentage distribution, which must be considered[7].
[7] See Russell (1999) FLC 92-877
The overall process to be applied in property settlement cases is summarised by the Full Court in Hickey (2003) FLC 93-143, where their Honours said:[8]
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case…
[8] At paragraph 39
My view is that the testing of any proposed orders by reference to section 79(2) is not a fourth substantive step (properly so called) in the property settlement exercise.[9] In applying s.79(2), the court has power to adjust the form, structure or balance (for want of a better description) of the orders that it is minded to make in order to give effect to its conclusion as to the parties’ respective entitlements after the application of the first three steps mentioned in Hickey. In other words, the determination of the proportional or other distribution or division of the parties’ property between them must necessarily be concluded before the court considers the justice and equity of the actual orders that are to be utilised to give effect to that distribution or division.
[9] See OSF & OJK (2004) FLC 93-191
In B & B (2006) FamCA 883, Faulks DCJ said[10];
If the judge has properly carried out his or her functions in determining the factors under section 79(4) (including those applicable factors under section 75(2)), the result overall should be just and equitable within the terms of the Family Law Act 1975. Accordingly, if a judge on reviewing his or her deliberations in relation to the first three stages concludes that the result does not appear to accord with justice and equity, then it is likely that the earlier adjustments were wrong. This fourth stage is really a description of a judicial thought process rather than a third discretionary phase. I do not accept the proposition that there is a third discretionary phase un-associated with contributions and/or the financial circumstances of the parties (or the other matters under section 79(4)) which somehow permits a judge in accordance with his or her conception of justice and equity to vary determinations otherwise properly made in accordance with the first two discretionary assessments.
I accept that in some cases there may be a minor adjustment required, for example to enable a cash-poor litigant to retain some real estate when he or she has no capacity to make any payment to the other party. For my part, it seems to me that even that sort of adjustment is more appropriately incorporated into the first two discretionary phases.
[10] In paragraphs 105 & 106
In Brice (2007) FamCA 170, however, Kay J suggested – in a passage that is clearly obiter – that section 79(2) is itself a source of substantive power. His Honour continued[11];
If the sum of the parts created by section 79(4)(a), (b) and (c) contributions and section 79(4)(e) considerations adds up to too much or too little, then further adjustments may be made in order to meet the over-riding dictate that an order must not be made unless it is just and equitable.
[11] At paragraph 19
For the reasons that I set out in OSF & OJK (2004) FLC 93-191 (and, in particular, in paragraphs 26 to 28 thereof), I prefer the analysis of Faulks DCJ in B & B to that of Kay J in Brice.
At the end of the day, though, the precise nature of the final step or stage in the property settlement exercise is of no significance in the present case. It is enough to record that the process involves the Court metaphorically “stepping back” to consider whether the proposed orders (arrived at after the application of the first three steps described in Hickey) are just and equitable.
Property and Liabilities as at the date of trial
The first step in the property settlement exercise relates to the identification and valuation of the parties’ property at trial.
Save for the husband's argument regarding the beneficial ownership of Property G, the identity of and value to be attributed to the property available for distribution between the parties at the date of trial were not in dispute. Thus, I find that the parties’ property and liabilities are as follows:
Assets Amount Sub Total 1. Property G $350,000 2. Less: Mortgage ($205,000) $145,000 3. Wife’s Westpac account $2,500 4. Wife's CUA account $100 5. Wife's ANZ credit card ($4,000) ($1,400) 6. Wife's car $5,200 7. Wife's [H] superannuation $5,065 8. Wife's [C] superannuation $25,000 $30,065 9. Husband's van $4,000 10. Husband's furniture, chattels and effects $500 11. Husband's [M] superannuation $500 TOTAL
$183,865
It can be seen from the above that the total net value of the parties' property is $183,865 – of which $500 comprises the husband's superannuation entitlements and $30,065 comprises the wife's superannuation entitlements.
It was not in dispute that the parties' respective superannuation entitlements should be included in the overall "pool" of property available for distribution between the parties. In other words, neither party suggested that superannuation should be included in a separate list[12], to be treated differently from the remaining items of property.
[12] see C v C (2005) FLC 93-220, at para.63
Agreed values
As indicated above, the values to be attributed to the items of property and liabilities comprising the pool were not disputed.
Contributions to the date of separation
I now turn to consider the second "step" of the property settlement exercise – namely, the identification and assessment of the parties' contributions in all their various guises.
At the commencement of cohabitation, the husband owned Property W (which was encumbered by a mortgage), together with the WA land. It is not possible to be more specific in the light of the paucity of evidence provided to the Court in relation to this subject.
Part J of the wife's financial statement indicates that the wife had approximately $20,000 in her [C] Fund (in Singapore, I assume) prior to the marriage.
It seems that the parties also had some savings, given that they travelled to Europe in or around July/August 1998 (approximately three or four months after the marriage), and given that the wife said that she paid for the ticket herself and took US$3,000 for spending money.
After the marriage, the wife continued to live in Singapore for approximately 12 months, whilst (I assume) the husband lived in Australia. There is no evidence as to how much they earned, or as to their respective financial or other contributions, during this period.
After the wife arrived in Australia (in approximately April 1999), the parties commenced living in Property W. [X] was born in 1999. In January 2001, the wife returned to Singapore with [X]. They remained there until approximately February 2002.
There is no or almost no evidence as to the parties’ respective financial or other contributions from the time the wife arrived in Australia to the time that she returned to Australia from Singapore in early 2002. I assume from the totality of the evidence, however, that the husband met the mortgage payments over Property W from whatever source or sources of income were available to him, and that the wife was the primary home maker – and later (after [X]'s birth) the primary home maker and parent. It is probable that the wife worked and supported herself and [X] financially while she was in Singapore for approximately 13 months. She said (and I accept) that she saved approximately $10,000 during that period – which she later provided to the husband to assist in the establishment of his "business". Clearly, the husband did not make any significant contributions as homemaker or parent during the time that the wife and [X] were in Singapore.
The parties and [X] lived in Property W from approximately February 2002 (upon the wife's return from Singapore) until separation in November 2004 -- a period of just under three years. Again, there is no or almost no evidence as to the parties’ respective financial or other contributions during this period. I assume from the totality of the evidence, however, that the husband continued to meet the mortgage payments over Property W from whatever source or sources of income were available to him, and that the wife was the primary home maker and parent.
I recognise, of course, that the husband provided accommodation for the wife at Property W while they cohabited there, and accommodation for [X] prior to separation, and when he was not in Singapore with the wife. I also recognise that the wife made no direct or (readily identifiable) indirect contribution to the acquisition, conservation or improvement of the WA land.
The husband purchased a van for his "business" approximately a year or so prior to separation. At or around that time (or perhaps earlier) the wife provided him with approximately $10,000 that she had saved when she was in Singapore in 2001/2. To the extent that the husband suggests that he received a smaller amount from the wife, I reject his evidence in that regard and prefer the evidence of the wife.
Doing the best that I can with the evidence available to me, I find that the husband's overall contributions (in all their various guises) were of considerably greater significance or weight than those of the wife during the period from the date of commencement of cohabitation to the date of separation, seen as a whole. The husband brought into the marriage of the two most significant items of property then in existence (being Property W and the WA land). It is likely that he financially supported the wife (and later the wife and [X]) while they were in Australia during this period. On the other hand, the wife financially supported herself (and later herself and [X]) while she was in Singapore for the first year of the marriage and for the period of approximately 13 months in 2001/2.
In Bremner (1995) FLC 92-560 and Way (1996) FLC 92-702, the Full Court cited with approval a passage from the judgment of Fogarty J in Money (1994) FLC 92-485, as follows:
… an initial contribution by one party may be “eroded” to a greater or lesser extent by the later contributions of the other party, even though those later contributions do not necessarily at any particular point outstrip those of the other party.
In Pierce (1998) 24 FamLR 377 (at 385), the Full Court sought to put Fogarty J’s quotation “in its correct context”. After referring to an expanded passage from Fogarty J’s judgment in Money – in which his Honour said that: “… the respective contributions of the parties over a long period of marriage ‘offset’ the significance which might otherwise be attached to a greater initial contribution by one party” – the Full Court said:
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 … regard must be had to the use made by the parties of that contribution.
The relevance of initial contributions was also discussed in Williams (2007) FamCA 313, where, before referring to dicta from Money and Pierce, the Full Court said[13]:
We think that there is force in the proposition that a reference to the value of an item as at the date of commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties. Thus, where the pool of assets available for distribution between the parties consists of, say, an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But, in so doing, it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
[13] at paragraph 26
In my opinion, had a property settlement been negotiated at the time of separation (and on the assumption that both parties had received competent legal advice), the various contribution factors would have favoured the husband to the extent that he would have been awarded something in the order of 65% to 70% of the property then available for distribution between the parties. Although the wife lived in Singapore for an extended period during a relatively short relationship (and supported herself whilst in that country), realistic weight must be given to the husband's initial contributions in the form of Property W and the WA land. I accept that the wife's contributions as homemaker and parent, and her absences from Australia without financial support from the husband (and also without any significant contribution from the husband in the role of homemaker or parent whilst she lived in Singapore with [X] in 2001/2), would have served to offset, dilute or erode -- the words may denote a distinction without a significant difference -- the significance of the husband's initial contributions, but, in my opinion, they would not have affected those contributions to any greater extent than the allowance of 65% to 70% to the husband would imply.
Section 75(2) factors at the date of separation
To conclude that the husband would have been awarded something in the order of 65% to 70 % of the property available for distribution between the parties at the time of separation on the basis of contribution alone is not to conclude, of course, that the property would ultimately have been divided on the basis of 65% to 70% to the husband and 30% to 35% to the wife. The fact of the matter is that the section 75(2) factors must also be taken into account. As indicated above, the Court has power to make an adjustment to the parties’ property settlement entitlements (based on contribution alone) in order to take account of, among other things, each party's means and needs.
The section 75(2) factors clearly favoured the wife at the time of separation. Without going into unnecessary detail at this time, it is clear that the following factors (at least) were relevant:
a)The wife was then 30 years old, and the husband was 50 years old.
b)There is no evidence to suggest that one party was in obviously better health than the other at that time.
c)I have already described the assets available to the parties in or about November 2004 when they separated. I accept the wife's evidence that the parties agreed that the total value of the property was in the order of $280,000 at that time.
d)There is little or no evidence about the parties’ respective earning capacities at the time of separation. According to the wife, the husband had been unemployed, or effectively unemployed, since approximately 2000. The wife obviously went on to work on a part-time basis as a personal care attendant in aged care facilities (and studied and later qualified as a nurse).
e)The wife was responsible for the care and supervision of [X] (who was then aged five or nearly five). It may have been the case that the husband looked after [X] for a period of week or two weeks immediately after separation, but the parties clearly agreed that the wife was to be primarily responsible for caring for and accommodating [X] in the long term.
f)There is no evidence regarding the commitments of each of the parties that were necessary to enable them to support themselves; nor does it appear that either party was responsible for the support of any other person (apart from [X]).
g)At some stage the husband became entitled to a disability pension. The evidence does not reveal when that entitlement arose. The wife had some modest benefits available to her in the [C] Fund in Singapore.
h)Clearly, each party was entitled to a reasonable standard of living. The parties agreed at that time, however, that the wife would have the primary responsibility for accommodating [X] in the long term.
i)There is no evidence that the duration of the marriage (itself) had affected either party's earning capacity.
j)Clearly, both parties wished to continue their roles as parents. Given that the parties had agreed that the wife would have the primary responsibility for caring for and accommodating [X] in the long term, and that the husband would pay no child support, the wife's needs in this regard clearly outweighed those of the husband.
k)There is no evidence that either party was then cohabiting with any other person.
l)The parties agreed that the husband would not be required to provide child support for [X] in the future. Even without such an agreement, it is fair to say that, at that time, the wife could not have reasonably anticipated ever receiving child support (or any significant child support) from the husband.
m)Although the parties reached an agreement at that time as described elsewhere in these Reasons, the separation agreement was not and is not binding on them.
Having regard to all the evidence before me (which is, of course, extremely limited), I find that it would have been appropriate – at that time – to make an adjustment to the preliminary split of the parties’ assets (on the basis of contribution alone) in order to take the section 75(2) factors into account. In my opinion, the most significant of the section 75(2) factors were the following:
a)The wife was to be primarily responsible for the long term care and supervision of [X], and she was obliged to provide accommodation for him.
b)The parties agreed that the husband would not be obliged to pay child support for [X] at any time in the future. As indicated above, even without such an agreement the wife could not have reasonably anticipated ever receiving child support (or any significant child support) from the husband.
In my opinion, an appropriate adjustment of the parties’ entitlements on the basis of contribution alone (being the parties’ entitlements on the basis of their respective contributions to the date of separation) would have been to increase the wife's entitlement by approximately 20%. It follows that the overall distribution of the property then available to the parties could arguably have been on the basis of approximately 50% to 55% to the wife and 45% to 50% to the husband.
Assessment regarding appropriateness of property division at the date of separation
In reality, and on the basis of the findings made elsewhere in these Reasons, the wife received approximately 60% of the net assets available to the parties at the time of separation (although not all the funds comprising this percentage entitlement were paid to her at the one time). It is fair to conclude, therefore, that the wife received some 5% to 10% more than what might have been perceived (at that time) to be a just and equitable property settlement. I accept, however, that there is a reasonable margin for error in the exercise of the discretions broadly associated with the property settlement exercise. It seems to me that the "additional" 5% to 10% received by the wife at that time falls comfortably within that reasonable margin for error. Put another way, the overall assessment of what might be perceived as a just and equitable entitlement by way of property settlement requires the assessment and balancing of the various contribution and section 75(2) factors. These assessments "call for value judgments in respect of which there is room for reasonable differences of opinion, no opinion being uniquely right”.[14]
[14] see Norbis (1986) 161 CLR 513 at 518
Post separation contributions
Immediately after separation, the wife purchased Property G using (in part) some of the funds provided by the husband. The husband continued to live in Property W until it was sold in 2006.
The husband also sold the WA land and provided the wife with what would appear to be the major portion of the net proceeds of sale. The moneys that the wife received from the sale of the WA land comprised part of the total sum of $160,000 that she received from the husband within approximately 6 months from the date of separation, and pursuant to the separation agreement.
There is no or almost no evidence regarding the direct and indirect financial contributions made by the husband to the acquisition, conservation and improvement of the parties’ property after the date of separation. It appears that he has had a very modest income since that time, the vast majority of which he has used to support himself and pay private school fees for [X]. The husband asserted, and I accept, that he provided the wife with a refrigerator and contributed slightly in excess of $1,600 towards the cost of a cooling system and satellite dish for Property G.
Since the date of separation, the wife has been solely responsible for all other expenses associated with Property G. She has met all mortgage payments relating to the property, and has otherwise met all other expenses relating to its conservation and improvement. She has accumulated her savings without relevant input from the husband. Similarly, the husband has made no relevant financial contribution to the motor vehicle now owned by the wife. Although the evidence is scant, it is fair to conclude that the wife has also accumulated her interest in her Australian superannuation fund, and increased her entitlement in the [C] Fund by about $5,000, without any relevant financial contribution on the part of the husband.
In relation to the period from the date of separation to the date of trial, I find that the wife's direct and indirect financial contributions to the acquisition, conservation and improvement of the property now available for distribution between the parties heavily outweigh those of the husband. In making this finding I acknowledge that the husband may not have been able to sell Property W and the WA land for the prices that he had anticipated when he and the wife negotiated the separation agreement. There is no evidence before me, however, as to whether the values adopted for those properties at the time of separation were reasonable or unreasonable, or as to the circumstances surrounding the sale of the properties and any factors that may have led to a lower than anticipated sale price being achieved.
There is no or almost no evidence to enable me to make any meaningful assessment of the parties’ non-financial contributions to the acquisition, conservation and improvement of the property now available for distribution between them. It appears that the husband was responsible for mowing the lawn at Property G for at least part of the period since the wife moved to the property, and he may still be responsible for that task. There was no evidence as to the amount of work involved in mowing the lawn, but even if I give the husband full credit for this activity it is unlikely to have any noticeable impact on the exercise of my discretion as it relates to property settlement. Still, I have not ignored the work done by the husband in this respect.
The wife has been [X]’s primary carer since the date of separation. There is no doubt, however, that the husband has been very significantly involved in [X]'s life, and that [X] has spent a great deal of time with him. The husband has regularly cared for and supervised [X] after school and at other times when the wife has been at work. I accept that he is an active, committed and concerned parent, and that [X] is his main priority in life.
The interim parenting orders made on 22 April 2009 and the February 2010 orders record the time that the husband has been spending with [X] since they have been in force.
The husband has paid no (or almost no) child support since the parties separated. It follows that the wife has been solely responsible for meeting all the costs associated with caring for, feeding, clothing and housing [X] during that period, although the husband has obviously met certain expenses associated with the time that he spends with [X]. With effect from late 2006, the husband commenced paying [X]’s school fees at private, Catholic schools. He has continued to pay all [X]'s school fees since that time. The husband has also paid some fairly modest additional expenses associated with [X]'s educational or sporting activities.
According to the wife's financial statement, her average weekly expenses for [X] total approximately $400. Even if I regard those expenses as slightly inflated (and I note that they include $50 per week in respect of [X]'s education expenses), it is fair to say that the wife is spending something in the order of $350 per week in order to meet expenses associated with [X]'s care. The husband estimates that he spends approximately $150 per week on expenses associated with [X]. This amount includes $70 per week in respect of education expenses.
Taking all the above matters into account, and in relation to the period from the date of separation to the date of trial, I find that:
a)the wife's direct and indirect financial contribution to the welfare of the family has significantly outweighed that of the husband (notwithstanding the fact that the husband has paid [X]'s private school fees); and
b)the wife's contributions to the welfare of the family in the role of home maker and parent have also significantly outweighed those of the husband.
Conclusion as to split on the basis of the parties’ contributions from the date of commencement of cohabitation to the date of trial
In my opinion, the ongoing contributions by the parties (and, in particular, the wife) since the date of commencement of cohabitation have clearly offset, diluted or eroded – again, the words may denote a distinction without a real difference – the significance of the husband's initial contribution (in the form, principally, of his net equity in Property W and the WA land). Leaving aside the separation agreement and the various transactions which followed at, there have been (as the Full Court recognised in Williams) a myriad of other contributions made by the parties during the course of their relationship, including financial and non-financial contributions, and contributions to the welfare of the family.
When I take into account the findings that I have made regarding –
a)the parties’ initial contributions;
b)the appropriateness of the division of assets that took place pursuant to the separation agreement (my findings in relation to which included a consideration of the contribution factors to that point); and
c)the parties’ contributions (in all their various guises) both prior to and since the date of separation,
and in all the circumstances (including the length of the period of cohabitation – involving, as it does, the initial 12 months of the marriage when the wife lived in Singapore and the 13 month period later in the marriage when the wife again lived in Singapore with [X] – and the fact that the current net value of the property available for distribution is only some $184,000), I find that the wife's overall contributions (in all their various guises) were of markedly greater significance or weight than those of the husband. I find that 70% of the overall property pool should be awarded to the wife on the basis of her contributions from the commencement of cohabitation to the date of trial. Conversely, 30% should be awarded to the husband.
Section 75(2) factors at the date of trial
So far, in considering the question of property settlement, I have dealt principally with the identification of the parties’ property and the question of their respective contributions. As I have already recorded, the Court has power to make an adjustment to a party’s property settlement entitlement based on such contributions in order to take account of, amongst other things, the parties’ respective means and needs. The Family Court has been critical of shorthand terms being used to describe this step in the property settlement exercise, preferring to refer to it simply as “the section 75(2) factors”.[15] .In essence, s.75(2) is concerned with the process of arriving at a just and equitable result.[16]
[15] See Clauson (1995) FLC 92-595.
[16] See, in that regard, Waters & Jurek (1995) FLC 92-635.
As indicated above, the section 75(2) factors clearly favoured the wife at the time of separation – some six years ago. I turn now, however, to assess the section 75(2) factors that adhere at the date of trial.
In my opinion, the following factors are relevant:
a)The wife is now aged 36, and the husband is now aged 56.
b)There remains no evidence to suggest that one party is in obviously better health than the other party, although I acknowledge that the wife is younger than the husband and that the husband is currently in receipt of a disability pension. I do not know the basis of the husband's entitlement to the disability pension.
c)It would appear that the husband’s only source of income is his disability pension. The wife is engaged in part-time paid employment as described elsewhere in these Reasons. The wife's earning capacity -- although modest -- appears to be significantly greater than that of the husband. I do not know, however, whether the husband is actually exercising such earning capacity as he may have. Suffice it to say that the wife's gross income from her employment is approximately $650 per week and that, in addition, she receives approximately $215 per week by way of allowances and benefits. The husband is in receipt of a disability pension, pursuant to which he receives approximately $350 per week.
d)I have described the property now available for distribution between the parties elsewhere in these Reasons. The total value of that property (treating both parties’ superannuation entitlements as "property") is approximately $184,000. The wife's superannuation entitlements (in Australia and in Singapore) have value of approximately $30,000. The husband's superannuation entitlements amount to approximately $500.
e)The wife remains primarily responsible for the care and supervision of [X]. The husband spends time with [X] pursuant to the February 2010 orders. [X] is 10 (nearly 11) years old.
f)Beyond the broad description of the parties’ financial position in their financial statements, there remains no evidence regarding the commitments that are necessary to enable them to support themselves; nor does it appear that either is responsible for the support of any other person (apart from [X]).
g)As I have recorded previously, the husband is entitled to a disability pension. The evidence does not reveal when that entitlement arose; nor does the evidence reveal the basis for the entitlement. The wife receives the allowances and benefits as recorded in her financial statement.
h)It remains the case that each party should be entitled to a reasonable standard of living. The fact of the matter is, however, that the property of the parties is of extremely modest value and it seems a fair inference that there are insufficient resources available to enable the husband to acquire residential accommodation of a similar standard to that of the wife. The husband is currently living in rented accommodation.
i)There remains no evidence that the duration of the marriage (itself) has affected either party's earning capacity.
j)Again, both parties wish to continue their roles as parents. The parties agreed at the time of separation, and the orders made in these proceedings reflect, that the wife will have the primary responsibility for caring for and accommodating [X] in the long term. It is unlikely that the husband will ever pay child support in a form that is likely to reduce the burden on the wife of having to feed, clothe, accommodate and care for [X] generally.
k)There remains no evidence to the effect that either party is cohabiting with any other person.
l)At the time of separation (some six years ago) the parties agreed that the husband would not be required to provide child support for [X] in the future. Even without that agreement, and as I have already recorded, it is fair to say that the wife could not then have reasonably anticipated ever receiving child support (or any significant child support) from the husband. Indeed, the wife still does not anticipate ever receiving child support (or any significant child support) from the husband, and I find that the husband is unlikely to ever pay any or any significant child support. On the other hand, I accept that the husband believes that a private, Catholic education is very important for [X] and that the husband will endeavour to meet the whole of [X]'s school fees at a private, Catholic school if he is able to do so. The wife said, and I accept, that it was not a priority for her that [X] attend a private, Catholic school, but that she did not oppose him doing so if the husband was prepared to pay for it. She regarded a private school education for [X] as a luxury that she could not afford.
m)I have taken into account the fact that the parties entered into and implemented the separation agreement. That agreement was not and is not binding on them, but it certainly guided, informed and/or explained some of the parties’ behaviour, and certain of their interactions, since they separated in November 2004.
Neither party suggested that there are any other facts or circumstances (beyond those referred to above) which the justice of this case requires be taken into account. It seems to me, however, that regard should be had to the following:
a)the wife purchased Property G approximately six years ago pursuant to and as envisaged by the separation agreement;
b)Property G is a very modest property, and provides accommodation for both the wife and [X];
c)the wife has met all the mortgage repayments associated with Property G; and
d)the husband has consistently emphasised (including during the course of the trial) that:
i)he seeks nothing by way of property settlement for himself;
ii)he commenced these proceedings in order to secure [X]'s alleged beneficial entitlement to a share in Property G; and
iii)he does not want Property G to be sold; nor does he want the Court to make any orders which may lead to the wife being unable to provide accommodation for [X].
Conclusion in relation to section 75(2) factors
Having regard to all the evidence before me, I am persuaded that it is appropriate to make an adjustment on the basis of the s.75(2) factors. I am so persuaded because the purpose of the s.75(2) adjustment is to assist the court in the process of arriving at a just and equitable result. To refuse to make an adjustment in the present proceedings would be to run the risk of making orders which are neither just nor equitable.
In my opinion, the most significant of the s.75(2) factors are as follows:
a)The wife's income earning capacity, although modest, appears greater than that of the husband, and the wife is considerably younger than the husband.
b)The wife will continue to be primarily responsible for the long term care and supervision of [X], and she is obliged to provide accommodation for him.
c)The wife is never likely to receive any or any significant child support from the husband.
d)As indicated above, the husband seeks nothing for himself by way of property settlement, and commenced these proceedings for the sole reason of endeavouring to persuade the Court to make orders recognising [X]'s alleged beneficial interest in Property G. The husband certainly does not want Property G to be sold, and does not want the wife to find herself in a situation where she cannot provide appropriate accommodation for [X].
When I have regard to the above matters, together with all the other matters discussed under the general heading of the s.75(2) factors, I conclude that an appropriate adjustment to the parties' entitlements on the basis of contribution alone (in order to take account of the section 75(2) factors) is to increase the wife's entitlement by 20%.
It follows that the overall distribution of the property between the parties should be on the basis of 90% to the wife (being 70% for contributions and 20% for the section 75(2) factors), and 10% to the husband.
Just and equitable?
Under section 79(2), the court is required to be satisfied that the order to be made is just and equitable – and not simply that the underlying percentage division of the net value of the parties’ property is appropriate. In other words, in the consideration of whether the overall result of property settlement proceedings is just and equitable, it is the justice and equity of the actual orders, and not of the percentage distribution alone, which must be considered[17].
[17] see Russell (1999) FLC 92-877
Although I am of the view that the testing of any proposed orders by reference to s.79(2) is not a fourth substantive step (properly so called) in the property settlement exercise, and although I have considered the justice and equity of the overall “split” under the general heading of Conclusion in relation to s.75(2) factors, I propose to (metaphorically) step back and consider whether the outcome achieved by my consideration of the parties’ contributions and the s.75(2) factors has brought about a just and equitable result.
The Full Court has cautioned against assessing the s.75(2) factors in percentage terms, without considering the real impact of any proposed adjustment. In other words, the real impact in money terms is "the critical issue".[18]
[18] see Clauson (1995) FLC 92-596
I have determined that the husband should be awarded 10% of the property now available for distribution. The total net value of the parties’ property is $183,865. 10% of $183,865 is $18,386.50. The husband has property currently worth $5,000. As a consequence, the wife will be obliged to pay to the husband $13,386.50.
In the present case, the s.75(2) adjustment equates to $36,773 (being 20% of $183,865). I am satisfied that the adjustment is proper. I am satisfied that it is proper even when regard is had to the differential between the wife's overall entitlement (being 90%) and the husband's overall entitlement (being 10%), which differential equates to 80% of the property pool (or approximately $147,000).
I am very conscious that justice and equity must be done to both parties, and I am satisfied that the split that I have proposed achieves that result. It is clear that the husband does not want to force the wife to sell Property G, and it is likely that she would have considerable difficulty borrowing sufficient funds to pay to the husband any greater sum than that which I have determined is appropriate. It needs to be said, as well, that there is no evidence that a comparatively modest additional payment to the husband would be likely to have a discernable impact on his standard of living. For example, the husband will not be able to purchase accommodation for himself. The likely result of the Court ordering the wife to pay more than the amount of $13,386 50 that I have determined is appropriate, however, is that she would be required to sell Property G. Such a result would inevitably cause very significant (and, in my view, unjustified) hardship to the wife and [X], whilst not significantly benefiting the husband.
As a result of the orders which I propose to make, the wife will retain all the property presently in her possession or under her control, including Property G. The husband will retain his van, his furniture, chattels and effects and his MLC superannuation entitlements. The wife will be obliged to pay to him $13,386.50.
I accept that the husband may not be minded to require the wife to pay the amount to which I have concluded that he is entitled. That is a matter for him.
Having regard to the parties' respective financial positions, I find that the wife should be allowed until 30 April 2011 to pay the husband the amount that I have determined is appropriate. The husband should be permitted to lodge a caveat against Property G to secure the payment.
Orders
I propose to make orders to the following effect:
a)The wife must pay to the husband the sum of $13,386.50 (“the payment”) on or before 30 April 2011.
b)The husband must forthwith remove any caveat that he may have lodged over the property situated at Property G in the State of Victoria (“Property G”), save for any caveat lodged for the sole purpose of securing the payment.
c)The husband must remove any caveat lodged against Property G for the purpose of securing the payment immediately upon receipt of the payment.
d)The wife retain the following as her sole property::
i)Property G;
ii)her motor vehicle;
iii)the furniture, chattels and effects presently in her possession;
iv)all moneys standing to her credit in any account in any bank, building society or other financial institution; and
v)her superannuation entitlements.
e)The husband retain the following as his sole property:
i)his motor vehicle;
ii)the furniture chattels and effects presently in his possession;
iii)all moneys standing to his credit in any account in any bank, building society or other financial institution; and
iv)his superannuation entitlements.
f)All extant applications otherwise be dismissed.
I certify that the preceding one hundred and thirty-four (134) paragraphs are a true copy of the reasons for judgment of Walters FM
Date: 9 December 2010
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