KARAS & KARAS

FEDERAL CIRCUIT COURT OF AUSTRALIA

KARAS & KARAS

[2018] FCCA 1678

Catchwords:
FAMILY LAW – Property – overwhelming initial financial and post separation contributions to asset pool by husband together with significant advancement by the paternal family – short marriage 4 years – significant and substantial time with child and father – wife re-partnered.

Legislation:

Family Law Act 1975, ss.75(2), 79

Cases cited:

C & C (No.2) [2005] FamCA 1223

Ferraro & Ferraro (1993) FLC 92-335

Pierce & Pierce [1998] FamCA 74

Applicant:

MS KARAS

Respondent:

MR KARAS

File Number:

SYC 8342 of 2015

Judgment of:

Judge Henderson

Hearing dates:

7, 8, 9 May 2018

Date of Last Submission:

9 May 2018

Delivered at:

Sydney

Delivered on:

27 June 2018

REPRESENTATION

Counsel for the Applicant:

Mr Johnston

Solicitors for the Applicant:

Tiyce & Lawyers

Counsel for the Respondent:

Mr Dura

Solicitors for the Respondent:

Owen Hodge Lawyers

ORDERS

That within 60 days from the date of these orders the wife shall transfer all her right, title and interest in the property situate at and known as Property A in the state of New South Wales ("the Property A property") to the husband.
Simultaneous with Order 1 herein, the husband shall comply with the following Orders:
(a)Discharge the mortgage secured over the Property A property and discharge the wife’s liability for that mortgage
(b)Pay to the wife the total sum of $285,400 by way of property settlement adjustment.
(c)Pay $500,000 owing to Mr D and Ms E or as they may direct and indemnify the wife against all future claims in respect of same.
Should the husband fail to comply with Order 2 herein, the parties shall do all acts and things and sign all documents necessary to effect a sale of the Property A property in the following manner and priority:
(a)List the Property A property for sale by private treaty with such agent as the parties may agree to appoint and in default of such agreement with such agent as nominated by the Real Estate Institute of New South Wales or his or her nominee, the cost of such appointment to be borne equally by the parties as and when they fall due;
(b)The sale price at which the Property A property shall be listed shall be as mutually agreed between the parties, or in the absence of agreement, shall be a price nominated by a valuer appointed by the Real Estate Institute of New South Wales or his or her nominee, the costs of such appointment to be borne equally by the parties as and when they fall due;
(c)Should the Property A property fail to sell by private treaty within 6 months from the date of listing, then the parties shall immediately list the Property A property for sale by public auction with such agent as the parties may agree to appoint and in default of such agreement with such agent as nominated by the Real Estate Institute of New South Wales or his or her nominee, the costs of such appointment to be borne equally by the parties as and when they fall due;
(d)The reserve price at which the Property A property shall be listed shall be as mutually agreed between the parties, or in the absence of agreement, shall be the price nominated by a valuer appointed by the Real Estate Institute of New South Wales or his or her nominee, the costs of such appointment to be borne equally by the parties as and when they fall due;
(e)Upon sale of the Property A property, the parties shall do all acts and things and sign all documents necessary to disburse the proceeds of sale in the following manner and priority:
(i)In payment of the agent’s commission, advertising expenses, legal expenses of the sale and any other costs associated with the sale;
(ii)In payment of the mortgage secured over the property by the Bank A;
(iii)to the wife 20% of the then balance together with interest calculated from 60 days after the date of these orders, or the sum of $285,400 together with interest calculated from 60 days after the date of these Orders, whichever sum is the greater;
(iv)In payment of $500,000 to the husband’s parents; and
(v)The balance to the husband.
The husband shall be solely entitled to the furniture and furnishings currently contained in the Property A property.
The wife shall be solely entitled to all jewellery in her possession.
Subject to the Orders contained herein, the parties shall each respectively retain all interest in and entitlement to:
(a)All personal property now in his/her respective ownership, possession or control;
(b)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively;
(c)All interests in life insurance policies and superannuation funds standing in his/her sole name respectively;
(d)All interests in any business to which either party has an interest in; and
(e)All other property (including chose's in action) of whatsoever nature and kind in the possession of either party at the date of these Orders.
That the Mother’s Application for child support departure pursuant to the provisions of sections 123(1)(b) and 123A of the Child Support (Assessment) Act 1989 be dismissed.
The wife shall vacate the Property A Property within 60 days of the date of these Orders and the husband shall have exclusive occupation of the Property A Property thereafter and be responsible for all outgoings in respect of the property including no less than paying the interest only component of the mortgage.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 8342 of 2015

MS KARAS

Applicant

And

MR KARAS

Respondent

REASONS FOR JUDGMENT

The matter of Karas commenced to be heard on Monday, 7 May, and was to deal with both property and parenting applications. To their credit, the parties reached an agreement in relation to the care arrangements for their son [X]. Final terms in relation to the child were entered into on Tuesday. [X] is spending significant and substantial time with his father and primarily lives with his mother. It was left to the Court to deal with the property aspect of this matter.
Additionally, the wife withdrew her application for a lump sum child support in the sum of $150,000. There was simply no evidence to support that claim. This resulted in a significantly shortened the hearing time and I thank both Counsel for their efficient and effective use of the resources of this Court.
Mr Johnston of Counsel acted for the applicant wife and Mr Dura of Counsel for the respondent husband.
The material the parties relied upon was as follows:
a)For the wife:
i)Initiating Application filed 23 February 2016;
ii)Financial Statement of 16 June 2016;
iii)Reply 4 August 2016;
iv)Affidavit of 23 April 2018;
v)Affidavit of her mother, Ms P filed 23 April 2018;
vi)Affidavit of Mr N, her partner, filed 24 April 2018;
vii)Minute of orders sought;
viii)Case outline and submissions prepared by counsel; and
ix)Only the wife and Mr N were cross-examined.
b)For the husband:
i)Response filed 1 March 2016;
ii)Amended orders sought are contained in the case outline; and
iii)Affidavit 23 April 2018, financial statement 23 April 2018 and an affidavit of his mother, Ms E all filed 23 April 2018.
Wife’s exhibits:
a)Exhibit 1, letter dated 3 May 2018 from the husband’s lawyer to the wife’s lawyer; the response of the wife’s lawyer of the same date together with a copy of a cheque for $100,000 dated 21 June 2013 paid by the husband into his father’s superannuation account;
b)Exhibit 2, pages 27 to 36 of her affidavit which is a copy of a pre-sentence report prepared by Dr C in relation to the husband for AVO proceedings in 2011;
c)Exhibit 4, the wife’s calculation of child support payable by the husband on his current income of $44,000 per annum a small sum of $2497 per annum.
Husband’s exhibits:
a)Exhibit 1, the husband’s Bank A account ending in the number to which the wife had access by way of use of a debit card;
b)Exhibit 2, Mr N income tax return for end of year 2016.
The parties presented a joint balance sheet marked Court exhibit 1.
Court exhibit 2, the parties respective costs schedule;
i)The wife has legal fees of $225,000 the husband $125,000.
Court exhibit 3, the family report;

Short Chronology

The husband is 41.
The wife is 37.
The wife migrated to Australia in 2000.
The parties commenced cohabitation in about 2010 and separated finally on 25 November 2014 when the husband left the former matrimonial home.
At the commencement of cohabitation, the wife had minimal property consisting of a car worth about $8000, $15,000 her mother had gifted her for the wedding and honeymoon, personal effects, and a credit card debt of $2000. The wife asserts she also had artwork and sculptures. Little turns on these assets.
At the commencement of cohabitation the husband had significant assets by way of property and an interest in a business. He had a sole trader business worth some $75,000, a third share in a family Business A worth about $11,000, today worth $10,000, an unencumbered unit at Property D valued at about $378,000, a third share of a property at Property E with his parents, worth around $150,000. He had a mortgage in respect of Property E of some $63,000. He had a jet ski of little value today, and superannuation of about $37,000.
The husband asserts the wife was unemployed from 2010 to 2011.
The parties married on 2010. This was a short marriage of some 4 years.
The husband asserts they spent $100,000 on the wedding and lived at the husband’s property at Property D.
In 2010, the husband sold his Business B for $55,000. That money was retained in an account, the account, which was later put towards the purchase of the former matrimonial home at Property A, the home which exists today. The parties agree that the husband put money from this sale of his business into an account in joint names.
In January 2011, a poor incident occurred which involved alcohol fuelled violence. The father behaved very poorly towards the mother and he was charged with an AVO. He attended counselling and he was sober for at least 10 months and a pre-sentence report of Dr C was produced at that time. That report makes clear reference to the husband’s overuse of alcohol as well as gambling. This is referred to in Dr C report in wife’s exhibit 2.
Dr C’s reports:
His Achilles heel appears to have been his heavy use of alcohol, the genesis of which appears to relate to some issues in his childhood that have prompted the use of alcohol as a form of self-medication on a reasonably frequent basis, such that he drinks to a point not only of intoxication but of emotional numbness. I note more recently he seems to have substituted gambling for his alcohol use for much the same reason, and this is something to be concerned about. Hopefully, this matter will be addressed with Dr S.
The report is dated 13 April 2011.
The wife asserts the husband had a gambling problem prior to and throughout the relationship, that he had a problem with alcohol as well and that he subjected her to violence and poor behaviour during the relationship at times. As the evidence unfolded these allegations by the mother had the ring of truth.
The wife had some work in 2011 and it is clear from bank statements attached to her affidavit that she deposited her weekly income into their joint account.
The wife secured full-time work in 2011 earning about $43,000 per annum. There is no dispute other than that she paid the entirety of her income into the parties’ joint account.
In 2011 the husband began working for his family business known as Business A and his income was about $30,000 per annum, which is about a third of the business income, and that continues to be the case today.
The husband continues in this occupation sharing the business income with his parents in a one third share.
On the evidence of Ms E senior between 2011 and 2014, the respondent’s parents agreed that he would retain the entirety of the income generated by the business for that period and his parents also paid his share of business expenses amounting to some $21,000. The total amount the husband asserts he owes his parents for retaining their income during the period is $211,966, together with business expenses of $21,000 is $232,966.
This decision, Ms E senior says was due to the husband and wife’s desire to purchase a home for themselves as opposed to the unit they were living in. The husband agrees with this evidence and asserts he and the wife have debt to his parents in the sum of $232,966. The wife is not party to these arrangements and does not accept that this is correct and disputes this is a debt owing or an advancement.
In April 2012 the husband sold his one-third share in the Property E property and retained his share totalling $161,858. It is agreed by the wife that his parents deposited $31,000 into the parties’ joint Bank A account on 27 April 2012 and on 18 June 2012, another deposit of $60,000 went into their joint Bank A account from the husband’s parents.
The wife asserts that by 2012 the husband’s parents had given them an unconditional gift of $750,000 to assist in the purchase of the Property A property. The husband disputes this unconditional gift and says the monies advanced was $785,724 of which $500,000 is still owing as a loan.
In 2012 the parties made a loan application with the Bank A for $500,000 to purchase the property at Property A and were successful given the money advanced to them by his parents.
The husband said the parties had the following at this time.
Proceeds of sale of his property at Property D, $370,000 and sale of Property E unit.
$58,628 remaining from the sale of the husband’s Business B.
$500,000 the husband’s parents directly transferred into the parties’ joint account. These monies together with borrowings of $500,000 enabled them to fund the purchase of the home.
One issue for the Court to determine is whether the moneys advanced to the husband and wife and at times just to the husband by his parents was a loan or a gift. The husband asserts he and the wife now have a debt to his parents of some $500,000 having repaid them over $285,000 of the total of $785,000 advanced.
The husband’s mother agreed that $200,000 of the $500,000 directly deposited into the parties’ joint account was a gift. However, she and the husband assert that the remaining $300,000, together with all other monies advanced being $232,966 of retained income of the joint business and payment of business expenses and money from the sale of their interest in the Property E property were loans. This amounted to some $785,824.
The husband asserts and his mother agrees that this debt has been reduced to $500,000 by the payment of the following:
a)Capital gains tax for his parents on the Property E sale and purchase of a car for his mother totalling $180,000.
b)Payment of $100,000 in superannuation for his father. As wife’s exhibit 1 shows, there was a discrepancy in the parties’ joint account and a debit of $100,000 which could not be explained by the husband when raised by the wife. He asserted in correspondence that the wife must have debited this sum. The reality was this was the $100,000 the husband drew by way of cheque for his father’s superannuation and the wife was blameless.
The husband’s attitude to this issue is consistent with the wife’s case that he treated her poorly during the marriage.
The husband says payment of those sums on his parents behalf support his contention that the advancements by his parents were loans and not gifts.
The wife agrees that she and the husband paid these monies but not as repayment of a debt, but to show their appreciation for the generosity that had been extended to them by the husband’s parents.
The parties purchased the home in Property A in about 2012 and the husband asserts that the home needed repairs and renovation before the parties could move in. He says much of this work was carried out by his family. The wife disputes this.
I prefer the husband’s evidence on this issue it is consistent with the supportive and generous family the husband has.
The wife’s employment was terminated in 2013. Her employment in the marriage was from 2011 to 2013.
Thus, of the $785,000 the husband asserts his parents advanced to the parties to enable them to buy their home, it is agreed $200,000, was by way of gift. The nature of the advancement of the balance of funds which the husband says is still owing of $500,000 is in contention.
Whatever finding I make on this issue, the monies came to the parties from the husband’s parents and not from a contribution by the wife. It is also clear that without these advancements the parties could not have purchased the home.
The wife says all monies advanced were by way of gift and she and the husband owe nothing to his parents. That argument is at odds with the clear payment by the husband of debts of his parents and the purchase of car for his mother.
Much was made of the loan documentation with the Bank A being Wife’s exhibit 4 and that the husband was not truthful to the bank when he said he had some $750,000 to put towards the purchase of the home as he now asserts $500,000 of that is a loan from his parents. This may be correct.
Little turns of that fact as I see it. Whatever way I look at this matter, without money from his parents the home would not have been purchased and the wife has benefited from these events as has the husband.
[X] is born on 2013.
The husband sold a sedan from his Business B for $9,500 in 2013 and applied $8,750 to the mortgage.
The parties separated on 24 November 2014 and the wife and child have remained in the home.
At [X]’s birth his maternal grandmother gave him $1500, the paternal grandparents, $10,800 and the parties won $14,000 on the Melbourne Cup. These monies were deposited into a joint account.
The wife is a trained (occupation omitted) and asserts when she ceased employment in 2013 and until separation in November 2014, she did the bookkeeping for Business A. I am not satisfied this was correct, however, as it appears from bank statements that the accounts were being done by the husband’s sister. However, even if this be as the wife asserts the time period is just over 12 months.
The husband asserts the wife spent extreme amounts of money on their son’s first birthday - $20,000 and was generally extravagant with money.
The wife asserts the husband gambled significantly throughout the marriage. Her evidence is that in a period from 1 March 2011 to 29 March 2011 he withdrew over $100,000 for gambling. From her reading of the bank statements there are regular withdrawals of $1000 - sometimes $1000 three days in a row – carried out over a period of time from their joint account. I accept these were withdrawals made by the husband and not the wife.
The husband says in that in March 2011 he was renovating the unit at Property D and that that was what this money was used for. The wife denies the unit at Property D was renovated in 2011, saying it was already renovated in 2010 when she and the husband commenced cohabitation.
The evidence of the paternal grandmother on this issue was clear.
She clearly remembers the husband and wife living with her and her husband for a period of two months after Christmas. When questioned on how she knew this was after Christmas, she said:
They got married; they had their honeymoon; they came back, they decided to renovate the property; they moved in with us.

The parties were married in 2010. The grandmother’s evidence on this issue was given clearly and without embellishment. I prefer the grandmother’s evidence and I reject the wife’s argument on when the property at Property D was being renovated.
As to what the renovations were, the cost thereof or what portion of the withdrawn moneys were used for the parties’ living or other expenses, I cannot say. No document was produced to show what was expended on renovation. No document was produced in relation to any other expenditure during this time other than the parties providing bank statements showing regular withdrawals of $1000 - sometimes $1000 three days in a row – carried out over a period of time from their joint account in 2011.
It is also clear that the husband gambled and perhaps is still gambling. The husband admitted he was gambling to Dr C. This has been an issue raised by the wife from the commencement of the proceedings and it was for the husband to provide somewhat more cogent evidence than he did to support his assertions that his gambling was not excessive. He told Dr C in 2011, he was too embarrassed to tell him how much he had lost that week gambling. Under cross examinations he said he may have lost $500. I do not accept losing that sum would have made him embarrassed.
The lack of any evidence by the husband as to costs of renovations, usual household costs, et cetera, to explain the expenditure of these large sums of money and his poor answer in relation to Dr C’s report results in my preferring the wife’s evidence that the husband has wasted joint assets on gambling. I am unable to say what that may amount to. The wife’s case that as he as he withdrew $1000 at hotels on a regular basis he was gambling all money he withdrew is not accepted by me. I also accept he drank to excess during the marriage and behaved poorly towards the wife when drunk.
There are some large withdrawals of money in 2011 of $31,000 on 22 March, $23,000 on 21 March and a further sum of $30,000 for example and the wife argues that the husband wasted this money on gambling.
This was at the time the husband and his mother said he was renovating the Property D property which I have accepted. Given there are only a few incidences of large withdrawals all around the same time, unlike the broad spread and frequency of the withdrawals of $1,000 I reject the wife’s contention that the husband gambled those large sums of money. However, the evidence supports that some of the money he withdrew in lots of $1,000 was wasted on gambling.
I cannot quantify this wastage, however, I accept it occurred and it is a relevant factor under section 79[1] or 75(2)(o)[2] of the Act[3].
[1] Family Law Act 1975 (Cth), s 79.
[2] Family Law Act 1975 (Cth), s 75(2)(o).
[3] Family Law Act 1975 (Cth).
The evidence is clear that apart from the issue of the husband’s gambling and excessive alcohol consumption, these parties put the totality of their income towards the maintenance and conservation of their matrimonial home and all their available energy and effort in the care of their son and into parenting and homemaking.
In terms of parenting and homemaking, I find that the wife carried out the lion’s share, given that she was at home caring for their son while the husband was working.
At separation, the wife took some $61,000 from the joint account and I will have regard to that in my decision.
Not only has the husband, either by way of gift or loan from his parents, which I will deal with shortly, made the overwhelming superior direct financial contribution to the current asset base, totalling no less than $750,000 now reduced to $500,000 he has made superior post separation contribution to the assets as he has continued to pay the mortgage and other fixed outgoings, reduced the principle by some $50,000 and the wife has been in exclusive occupation of the home since separation.
Therefore, pre cohabitation and post separation the husband has made a superior financial contribution to the assets over that of the wife. I accept the wife’s assertion that the asset base has been diminished by his gambling of an unknown, yet not insubstantial amount of money during the relationship. I base my finding that the amount is not insubstantial on the following:
a)His words to Dr C in 2011 in the pre-sentence report that he was too embarrassed to tell the Doctor how much he had gambled that very week; and
b)His failure to provide any evidence to enable me to assess how much of the money he withdrew in $1,000 lots at various Hotels and the like on usual family expenses in 2011 or any year.
The next question is, were the advancements by his parents loans or gifts to him. The evidence of the paternal grandmother was convincing:
We transfered our son $500,000. We gifted to our son $200,000 of the $500,000 we transferred to his account to purchase the property. The rest was loaned to him. $300,000 from the $500,000, the money received by him receiving all of the income for some three years from the Business A and our interest in the sale proceeds of the property at Property E.
The paternal grandmother was clear these three sources of funds were loans to be repaid. Evidence these suns were loans is not in any written document in any form whatsoever. The only objective evidence to support the loan is the repayment by the husband and wife of capital gains tax for his parents from the sale of Property E, purchase of a car for his mother and payment of $100,000 toward his father’s superannuation.
Those transactions may well evidence the existence of an oral loan between the husband and his parents.
The wife has attached to her affidavit documents she recently obtained from the Bank A bank from whom the parties obtained their loan. Annexure K to her affidavit is a letter dated 18 April 2012 in the handwriting of the paternal grandfather, which reads:
I, Mr D, confirm employment of Mr Karas to my business. I’ve owned Business A for 15 years and now have placed Mr Karas as my full-time manager as of this year. He currently earns between 5 and 7 thousand per month. If you would like to discuss this any further you can contact me at any time.
That letter confirms the arrangement at that time between the husband and his parents that he would receive the entirety of the business income of the Business A including that to which he had a share being 33%.
Annexed to the paternal grandmother’s affidavit is a letter in her handwriting dated 18 April 2012 addressed to the bank as follows:
We, Mr D and Ms E, wish to confirm that our son, Mr Karas, will receive a gift of $200,000 in June upon the settlement of our property at Property B, which was sold for 1.1 million. Should you require any evidence of sale of property, please contact our solicitor. In conclusion, we will also assist with moneys for Mr Karas and Ms Karas for purchase of the new property. If you have any questions, please do not hesitate to contact us on –
This document is signed by the grandmother and the grandfather.
These documents support the husband and grandmother’s position.
The controversial document is annexure L to the mother’s affidavit and K3 to the grandmother’s affidavit. This is the only document which is typed. All other letters from the grandparents are hand written. The letter is dated 18 April 2012, has the grandmother’s Suburb M address and is headed. “To whom it may concern” – not addressed to the Bank A bank as all other letters have been. The letter reads:
I, Ms E, will give my son, Mr Karas, and daughter-in-law, Ms Karas, an unconditional gift of 750,000 to assist them with the purchase of their new home located at Property C, New South Wales. If you need more got information, contact us.
The wife’s evidence is she received this letter, annexure L to her affidavit, together with the loan document when she went to the bank on 16 April 2016 to obtain documents to support what she says was the arrangement between the parties and the husband’s parents. The wife says this document supports her case this money was a gift to them.
The paternal grandmother says she has never seen this document before, but she accepts the signature at the bottom it does look like her signature. The husband says this was not a document his parents ever provided to the bank. I accept that the mother received this document from the bank. However, importantly the letter does not refer to the property that the parties ultimately purchased. It refers to a property at Property C, New South Wales, which they did not purchase.
I do not see how I can use this document supplied for the purchase of a property the parties did not purchase in support of the wife’s assertion of an unconditional gift of $750,000, when I have two other documents setting out the nature of the parents advancement to assist in the purchase of the property the parties did purchase.
No one produced the entirety of the Bank A bank file so the court could be apprised of actually what was constituted in it. All I have is bits of the file.
Given the denial by Ms Karas Senior that she produced this document, that it is the only typed document in her name, that it refers to a property at Property C, not the former matrimonial home, I am concerned to rely on this document as evidence of a gift and to do so would be an error.
On the other hand, the grandparents and husband have not produced sufficient evidence for me to be satisfied there was a loan that would be proved in civil proceedings between them which now stands at $500,000. That is the test, would the loan alleged be provable in civil proceedings and I find it would not.
I find apart from the $200,000 gift the remainder of money provided, some $750,000 now standing at $500,000 was an advancement made by the husband’s parents consistent with the letter that the grandmother wrote to the bank on 18 April 2011:
We will also assist with moneys for Mr Karas and Ms Karas’ purchase of the new property. If you have any questions, please do not hesitate to contact us.
I do not see the husband or grandparents committed a fraud on the bank by the husband telling the bank that with the gift of $200,000 from his parents and the bank loan he had sufficient funds to purchase the property. He did have sufficient funds because his parents had advanced that money to him as they told the bank they would.
The only letter that takes the grandmother’s conduct or the husband’s conduct into some area of perhaps illegality is the typed letter of 18 April 2012, and that relates to an entirely different property. I reject any submission that the husband or grandparents perpetrated a fraud on the bank.
The grandmother’s evidence was clear. She gifted $200,000 to Mr Karas and Ms Karas because that is what she and her husband had done for his sister. Thus I find that the parents gifted the parties $200,000 and advanced the remainder of the money they needed, which today stands at $500,000 in order to assist them to purchase their property.
I also am of the view that the husband will pay his parents back either in a re-finance or by sale of the home. That does not mean that the wife also owes his parents money rather I accept his strong moral obligation to repay this money to his parents.
Having made these findings, my determination now is how do I adjust the property between the parties?
I will rely upon the well-known decisions of Pierce & Pierce[4], C & C[5] and Ferraro & Ferraro[6] in the assessment of the husband’s superior initial financial contribution, and the four step approach under section 79 of the Act[7].
[4] Pierce & Pierce (1998) FamCA 74.
[5] C & C (No.2) [2005] FamCA 1223.
[6] Ferraro & Ferraro (1993) FLC 92-335.
[7] Above, note 1.
The first task is to identify the matrimonial property for distribution.
I have not included the husband’s Jet Ski as a matrimonial asset he had this well before co-habitation.
I have not included the wife’s jewellery as matrimonial assets as it is gifts to her.
The wife withdrew $61,000 from the parties’ joint account, and I will take that into account in my determination and not add it back. This process is artificial enough without adding back money expended on living.
The mortgage is $405,000. At separation it was $452,462 .The husband has reduced that mortgage by almost $50,000. I will take that into account in my deliberations.
The wife has $22,672 in superannuation.
The husband, $100,000 superannuation.

Balance Sheet

ASSETS
Ownership		Description	Value
1	J	Property A	$1,800,000
2	H	Motor Vehicle 1	$17,500
3	H	1/3 interest in Business A	$10,000
4	J	Furniture and Furnishings	$5,000
Total		$ 1,832,500

LIABILITIES
Ownership		Description	Value
5	J	Bank A mortgage	$405,000
Total		$ 405,000
Net assets excluding superannuation		$1,427,000

SUPERANNUATION
Member		Name of Fund	Type of Interest	Value
6	W	Super Plan F	Accumulation	$22,672
7	H	Super Plan G	Accumulation	$100,253
Total		$ 122,925

Going now to the parties’ contribution based entitlement to their assets.
The husband and his family have made an overwhelming contribution to the current asset base.
There was a gift of $200,000 to the parties by his parents. Advancement of monies to enable the home to be purchased which the husband will repay and which stands now at $500,000.
The husband contributed some $370,000 from the sale of his Property D property, a property owned by him pre marriage to Property A. The parties lived in Property D for perhaps under 2 years. He contributed his share of the sale of Property E at 186,000.
The husband contributed the sale of his Business B, $58,628 to the purchase of the property and some $8,000 odd dollars from the sale of his last (business activity).
These contributions amount to $1.2 million of a current net asset pool of $1,388,000.
I accept that the husband feels obligated to repay his parents $500,000.
.The direct financial contribution by his parents was additionally significant as it allowed the parties to purchase Property A and minimised the interest payable by them to the bank. I also note that the husband provided a home for the wife rent-free immediately upon marriage.
The wife’s direct financial contribution to the property was limited to her income, which she earnt for a period of some three to four years of well under $44,000 per annum and her share of the $200,000 gift from the husband’s parents. I accept her contribution as parent and homemaker exceeded those of the husband during this short unhappy marriage of some 4 years. Otherwise, her contribution-based entitlement is limited.
I have assessed the husband’s direct financial contribution at 90% in the absence of consideration of the consequence to the matrimonial pool of his gambling.
I accept the wife’s case that the husband gambled and drank alcohol to excess during the marriage. The extent of that gambling, I do not know. I accept his gambling diminished the matrimonial pool, perhaps by more than $100,000 as the wife asserts. I accept that this asset pool has been reduced by the husband’s gambling as the sums contributed from the husband’s pre owned assets, the existing advancement from his parents and the monies borrowed from the bank to purchase the home exceed the current asset pool. I reject the husband’s claim that the wife’s extravagant spending diminished the asset pool.
Taking into account as best I can the husband’s diminution of the matrimonial pool due to gambling, I will reduce his contribution based entitlement to by 12%, to 78% leaving the wife’s contribution based entitlement at 22%.
The wife’s allegations of violence. I accept the wife’s allegations that the husband behaved badly towards her during the marriage, often alcohol fuelled and that this made her homemaking and parenting contributions harder than they needed to be. However, this is a very short marriage and I have no evidence that this behaviour has had an impact upon the wife’s day to day functioning. I will allow her 3% adjustment for this factor giving the wife a contribution based entitlement of 25% and the husband 75%.
Post-separation, the husband has made an overwhelming direct financial contribution to the family and joint assets in reducing the mortgage by $50,000, providing a fully funded home for the wife and his son for 3.5 years, paying all the mortgages and council rates on that property, requiring the wife only to pay for, effectively, utilities. Additionally the wife took $61,000 of the parties’ joint funds at separation. In those circumstances I will adjust the husband’s contribution-based entitlement for the past for his contribution post-separation by 10% giving him a contribution-based entitlement of 85% and the wife, 15%.
Going now to the 75(2)[8] factors.
[8] Family Law Act 1975 (Cth), s 75(2).
The husband has secure employment with his family company. He receives the benefits of successful self-employment such as telephones, cars and the like.
The wife has re-partnered with Mr N, a man who earns $60,000 per annum and is also self-employed. He is not a man of means, but has and will support the wife as they have a 10 month old daughter and plan to move in together in the future when this is over.
The wife has the parties’ son and her daughter to care for. It will be some time before she is able to return to the workforce in any meaningful sense in terms of days to be worked due to the age of her children.
I accept her capacity to enter the workforce is limited at this stage and she will take longer to establish herself and enjoy the benefit of employment such as the husband. However she has partner who has and will support her. I will allow the wife an additional 5% for her 75(2)[9] factors. This gives her an entitlement of 20% and the husband 80%.
[9] Above, note 8.
What is the result of these orders which I must assess in order to determine whether the orders I propose to make are just and equitable in all the circumstances.
I am adjusting the wife’s entitlement on a net pool of $1,427,000. 20% of that pool is $285,400 to the wife and $1,141,600 to the husband. I accept the husband will repay his parents $500,000 leaving him with $641,600.
I do not propose to make a splitting order in relation to superannuation. The relationship was short and the wife’s direct financial contribution to this asset was modest.
Should the husband determine to sell the property, I will order the wife receive either $285,400 plus interest from the sale proceeds, or 20% of the net proceeds of sale after the mortgage and usual conveyancing costs are deducted together with interest on that sum being whichever sum is the greater.
I find these orders are just and equitable in all the circumstances and will so order.

I certify that the preceding one hundred and twenty-five(125) paragraphs are a true copy of the reasons for judgment of Judge Henderson

Date: 26 June 2018

[2018] FCCA 1678

27 June 2018

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Family Law

Property Law

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Res Judicata