Kaye & Tait
[2023] FedCFamC2F 1590
•8 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Kaye & Tait [2023] FedCFamC2F 1590
File number(s): NCC 674 of 2023 Judgment of: JUDGE KEARNEY Date of judgment: 8 December 2023 Catchwords: FAMILY LAW – Property – de facto – declarations satisfy jurisdiction - global approach adopted – where both the financial resource attributable to the de facto wife and the property pool is considered - 75:25 adjustment of the property pool in favour of the de facto husband – just and equitable Legislation: Family Law Act 1975 (Cth) Part VIIIAB ss 4AA, 4AB, 90RD(1), 90SM, 90XT, 106A Cases cited: Baumgartner v Baumgartner [1987] HCA 59; (1987) 154 CLR 137; (1987) 11 Fam LR 915
Benson & Drury [2020] FamCAFC 303; (2020) 62 Fam LR 1
Bevan & Bevan [2013] FamCAFC 116; (2013) 49 Fam LR 387
Blandford & Esmore [2022] FedCFamC1A 67
C & C [2005] FamCA 429; (2005) FLC 93-220
Dickons & Dickons (2012) 50 Fam LR 24
Fields & Smith [2015] FamCAFC 57; (2015) 53 Fam LR 1
Gadhavi & Gadhavi [2023] FedCFamC1A 117; (2023) 67 Fam LR 174
Hall & Hall [2016] HCA 23
Hobson & Hobson [2020] FamCAFC 251
In the Marriage of Kowaliw [1981] FamCA 70; (1981) FLC 91-092
Jabour & Jabour [2019] FamCAFC 78
Jonah v White [2012] FamCAFC 200; 48 Fam LR 562
Lenehan & Lenehan [1987] FamCA 8; (1987) FLC 91-814
Lotta & Lotta [2017] FamCA 50
Lovine & Connor and Anor [2012] FamCAFC 168
Mallet v Mallet (1984) 156 CLR 605
Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583; (1985) 11 Fam LR 930
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17; 10 Fam LR 819
Petrellis & Petrellis [2023] FedCFamC1A 104
Petruski & Balewa [2013] FamCAFC 15
Pierce v Pierce [1998] FamCA 74; (1998) 24 Fam LR 377; (1999) FLC 92-844
Stanford & Stanford [2012] HCA 52; [2012] 247 CLR 108; (2012) 47 Fam LR 481
Wallis & Manning [2017] FamCAFC 14
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447
Division: Division 2 Family Law Number of paragraphs: 86 Date of hearing: 22 September 2023 Place: Newcastle Counsel for the Applicant: Ms Kate Hamilton Solicitor for the Applicant: Gillard Family Lawyers Counsel for the Respondent: Ms Catherine Spain Solicitor for the Respondent: Spire Law Pty Ltd ORDERS
NCC 674 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS KAYE
Applicant
AND: MR TAIT
Respondent
ORDER MADE BY:
JUDGE KEARNEY
DATE OF ORDER:
8 DECEMBER 2023
THE COURT DECLARES THAT:
1.Pursuant to s 90RD(1) of the Family Law Act 1975 (Cth) (‘the Act’):
(a)the applicant, MS KAYE (‘the de facto wife’) and the respondent, MR TAIT (‘the de facto husband’) were in a de facto relationship for more than two (2) years for the purposes of s 90SB(a);
(b)the de facto relationship ended in May 2020;
(c)the parties made substantial contributions to their property; and
(d)a failure to make an Order pursuant to s 90SM and/or a declaration pursuant to s 90SL would result in serious injustice to the parties.
2.Pursuant to s 90RD(1) of the Act and for the purposes of s 90SK:
(a)The de facto wife was ordinarily resident in a participating jurisdiction (namely the State of New South Wales) at the time when the application for orders under s 90SM was made; and
(b)Both parties were ordinarily residents of the State of New South Wales during at least one-third of the de facto relationship.
THE COURT ORDERS THAT:
3.These Orders are made by way of alteration of property interests pursuant to s 90SM of the Act.
4.By Friday 2 February 2024, the de facto husband shall pay to the de facto wife the sum of $200,445.00.
5.Subject to these orders, the de facto wife shall retain for her sole use and benefit, and the de facto husband shall relinquish any claim to; all assets and/or financial resources owned or possessed by the de facto wife, or to which the de facto wife is legally or beneficially entitled, included but not limited to:
(a)Personal effects in her possession;
(b)Furniture in her possession;
(c)Contents of bank accounts in her sole name;
(d)Motor Vehicle 1; and
(e)Her Superannuation entitlements.
6.Subject to these orders, the de facto husband shall retain for his sole use and benefit, and the de facto wife shall relinquish any claim to; all assets and/or financial resources owned or possessed by the de facto husband, or to which the de facto husband is legally or beneficially entitled, included but not limited to:
(a)The property situated at B Street, Suburb C in the State of New South Wales (“the Suburb C property”);
(b)Motor Vehicle 2;
(c)Motor Vehicle 3;
(d)Personal effects in his possession;
(e)Furniture in his possession;
(f)Motor Vehicle 4 in his possession;
(g)Contents of bank accounts in his sole name; and
(h)His Superannuation entitlements.
7.The de facto wife shall be responsible for any liabilities incurred in her name and indemnify, and keep indemnified, the de facto husband against such liabilities including but not limited to:
(a)Car loan #...19;
(b)Student debt;
(c)Visa card #...94; and
(d)All other borrowings, personal loans, and credit card facilities and indemnify and keep indemnified, the Respondent against such liabilities.
8.The de facto husband shall be responsible for any liabilities incurred in his name and indemnify, and keep indemnified, the Applicant against such liabilities including but not limited to:
(a)Car loan;
(b)Mastercard;
(c)P Company Credit Card; and
(d)All other borrowings, personal loans, and credit card facilities and indemnify and keep indemnified, the Respondent against such liabilities.
Superannuation Orders
9.With respect to the de facto husband's interest in Super Fund 1 (“the Fund”), member number …:
(a)A base amount of $50,130 is allocated, as required by s90XT(4) of the Family Law Act 1975, to the de facto wife out of the de facto husband's interest in the Fund.
(b)In accordance with paragraph 90XT(1)(a) of the Family Law Act 1975:
(i)The de facto wife is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
(ii)The de facto husband’s entitlement to payments out of his interest in the Fund and the entitlement of such other person to whom a splitable payment may be payable, is correspondingly reduced by force of this Order.
(c)The Trustee of the Fund, D Company (“the Trustee”) shall do all such acts and things and sign all such documents as may be necessary to:
(i)Calculate, in accordance with the requirements of the Family Law Act 1975 and Family Law (Superannuation) Regulations 2001, the entitlement created for the Applicant by Orders 9(a) and 9(b);
(ii)Pay the entitlement whenever the Trustee makes a splitable payment out of the de facto husband’s interest in the Fund.
(d)This Order has effect from the operative time, and the operative time for this Order is four (4) working days from the date of service of a copy of the Order upon the Trustee.
10.Order 9 binds the Trustee of the Fund.
Other orders
11.In the event that the de facto husband does not comply with Order 4 THEN, unless otherwise agreed between the parties in writing, both parties shall do all acts and things and execute all documents necessary to:
(a)Cause the Suburb C property to be listed for sale with a real estate agent by early 2024; and
(b)Sell the Suburb C property.
12.To give effect to Order 11(b):
(a)That until Friday 8 May 2024 or such other period as agreed in writing between the parties, the parties shall do all acts and things necessary to cause the Suburb C property to be listed for sale with a real estate agent by private treaty, and:
(i)The real estate agent shall be as agreed between the parties or, failing agreement, a real estate agent nominated by the New South Wales Chair of the Australian Property Institute or his or her nominee following a request by either party to make such nomination;
(ii)Any upfront expenses incurred with the real estate agent shall be paid equally by the parties.
(iii)The Solicitor acting on the sale shall be as agreed between the parties or, failing agreement, a solicitor nominated by the President of the City E Law Society or his/her nominee following a request by either party to make such nomination;
(iv)Any upfront expenses incurred with the solicitor shall be paid equally by the parties.
(v)The list price shall be as agreed by the parties, or failing agreement, nominated by the real estate agent following a request to make a nomination by either party;
(vi)The sale price shall be as agreed by the parties or, failing agreement, nominated by the real estate agent following a request to make such a nomination by either party;
(vii)The parties shall execute:
A.All documents requested by the real estate agent for the sale of the Suburb C property;
B.The contract for sale; and
C.All other documents necessary to complete the sale.
(viii)The parties shall co-operate in every way with the real estate agent in relation to the sale of the Suburb C property.
(b)If the Suburb C property has not been sold by private treaty by mid-2024 THEN, unless otherwise agreed in writing between the parties, both parties shall do all acts and things so as to sell the Suburb C property by public auction and:
(i)The auctioneer shall be as agreed between the parties or, failing agreement, an auctioneer nominated by the real estate agent following a request to make such a nomination by either party;
(ii)Any upfront expenses incurred with the auctioneer shall be paid equally by the parties.
(iii)The auction shall take place within 8 months of the date of these Orders;
(iv)The reserve price shall be as agreed by the parties or, failing agreement, nominated by the auctioneer following a request to make such a nomination by either party;
(v)The parties shall execute:
A.All documents requested by the auctioneer for the sale of the Suburb C property;
B.The contract for sale; and
C.All other documents necessary to complete the sale.
(vi)The parties shall co-operate in every way with the auctioneer in relation to the sale of the Suburb C property; and
(vii)The parties shall attend at the auction and negotiate with the highest bidder if the reserve price is not reached and, in the event that the parties cannot agree as to the acceptance or rejection of a price less than the reserve price, they shall accept the advice of the auctioneer as to the acceptance or rejection of such price.
(c)If the Suburb C property is not sold at the first auction then, unless otherwise agreed by the parties in writing, the parties shall resubmit the Suburb C property for auction within eight (8) weeks of the first auction and the provisions of Order 12(b) shall apply.
(d)If the Suburb C property is not sold at the second auction then, unless otherwise agreed by the parties in writing, the parties shall leave the Suburb C property on the market for sale by private treaty and liberty is reserved for either party to apply to the Court for further Orders relating to the sale of the Suburb C property.
(e)Until completion of sale of the Suburb C property the de facto husband shall:
(i)Make the following payments as they fall due:
A.Council and water rate instalments;
B.Household building insurance; and
C.The payments in respect of all mortgages secured on the Suburb C property.
(ii)Keep the Suburb C property in good repair (having regard to its present condition); and
(iii)Make a key available and permit inspection of the Suburb C property by agents and prospective purchasers at all reasonable times.
(f)Subject to the de facto husband complying with Order 12(e); he shall have the right to occupy the Suburb C property until completion of the sale of the Suburb C property.
13.The parties shall do all acts and execute all documents to cause the proceeds of sale of the Suburb C property to be applied in the following order:
(a)To discharge any mortgage secured on the Suburb C property;
(b)To pay the reasonable expenses of the sale, including agent’s commission and legal costs and disbursements;
(c)To pay rate adjustments;
(d)To pay the remainder of the sale proceeds (“the remainder”), subject to Order 12(e), as follows:
(i)to the de facto wife in accordance with her written direction and calculated by reference to the following formula:
(SP + WA + HA) x 25% = the de facto wife’s share
Where
SP = the remainder,
WA = De facto wife’s assets and financial resource already in her possession totalling $100,507,
HA = De facto husband’s assets already in his possession totalling $1,103,303; and
(ii)To pay the balance to the de facto husband.
14.If either party refuses or neglects to sign (within 14 days of a written request to do so) any documents necessary to effect the terms of these Orders, all Senior Judicial Registrars, Judicial Registrars and Deputy Registrars of the Federal Circuit and Family Court of Australia are hereby appointed pursuant to the provisions of Section 106A of the Family Law Act to execute such documents on behalf of such party.
15.Save for any prospective cost application/s, all outstanding applications are otherwise dismissed.
16.By 4.00pm on 12 January 2024, any party seeking an order for costs shall file and serve an Application in a Proceeding and supporting affidavit(s) and financial statement (if applicable).
17.By 4.00pm on 2 February 2024, the other party shall file and serve a Response to an Application in a Proceeding, with supporting affidavit(s) and financial statement (if applicable).
18.Should an application for costs be filed, THEN pursuant to rr 5.02(2)(c) and 5.09 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (‘the Family Law Rules’), the application will be listed for hearing before Judge Kearney in chambers with no appearances required.
THE COURT NOTES THAT:
A.In the event that a party fails to comply with the orders made regarding the costs hearing; THEN consideration will be given to the hearing proceeding on an undefended basis.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE KEARNEY
INTRODUCTION
The parties were in a de facto relationship for less than 10 years during which time they variously acquired interests in both superannuation and non-superannuation property. The de facto wife sought property adjustment orders giving her (in effect) 40% of the parties’ property whilst the de facto husband sought the adjustment to her should be more like 10%. Should the de facto wife receive what she wants, what the de facto husband wants to pay, or something else?
Out of respect for each person’s gender and social status, other than parties, persons will be identified by their surnames and where applicable there will be an avoidance of the use of gendered pronouns.
These proceedings involve a financial dispute invoking Part VIIIAB of the Family Law Act 1975 (Cth) (‘the FLA’) between the applicant, MS KAYE (‘the de facto wife’) and the respondent, MR TAIT (‘the de facto husband’).
Where calculations have been conducted, at times I may have rounded up or down to the nearest AUD$100 and omitted references to cents.
There was no contest about the Court’s jurisdiction to entertain the parties’ respective property adjustment applications and as such the main property adjustment issues in the case were:-
·What does the balance sheet look like?
·Why do the parties ask the Court to make a property adjustment order?
·What were the direct and indirect financial and non-financial contributions of the parties and how should the Court assess them?
·Are there any relevant future needs?
·What outcome will be just and equitable?
With that background and in broad compass, the de facto wife proposed that:-
(a)The de facto wife should receive 40% of the parties’ non-superannuation property interests which, following closing submissions, looked like the de facto wife retaining what she already had and receiving about $793,300 in cash;
(b)The de facto husband’s superannuation interest with Super Fund 1 being split so that the de facto wife’s nominated superannuation fund received about $161,150 and the de facto husband retained the balance;
(c)The parties to otherwise retain the property that they each have power, possession and control over.
In broad compass, the de facto husband proposed that:-
(a)The de facto wife should receive 10% of the parties’ non-superannuation property interests which, following closing submissions, looked like the de facto wife retaining what she already had and receiving $137,000 in cash;
(b)The parties to otherwise retain the property that they each have power, possession and control over.
For the reasons that follow, I will:
(a)make a declaration that grounds the Court’s jurisdiction including that the parties’ de facto relationship endured for more than two (2) years and ended in May 2020;
(b)make orders for the de facto husband to pay the de facto wife $200,445, failing which the husband is to sell Suburb C (‘the Suburb C property’) with the nett sale proceeds to be divided in accordance with an equation that ultimately reflects a 75:25 adjustment of the non-superannuation property in favour of the de facto husband;
(c)make a splitting order from Super Fund 1 in favour of the de facto wife for $50,130;
(d)make various orders and declarations to otherwise finalise the parties’ financial relationship (s 90ST); and
(e)make ancillary orders and notations to support me determining any costs application that may arise, provided that such application is filed by Friday 12 January 2024.
I have read all the evidence relied upon in the proceedings but do not propose to repeat it here. As the High Court reminds me in Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 at [62]:
62A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case.
Statements of facts as set out below should constitute findings of fact unless otherwise expressed.
ISSUES
Does the court have jurisdiction to entertain the parties’ applications?
The parties are at odds about when the de facto relationship started, with the respondent de facto husband suggesting the parties entered a relationship as a couple living together on a genuine domestic basis in mid-2012[1] and the de facto wife suggesting it was earlier than that, in either early 2011 or late 2011.[2]
[1] Affidavit of Mr Tait filed 25.08.2023 at paragraph [8]. For ease of reference, in future the contents of this affidavit will be identified as ‘T’ with paragraphs identified numerically.
[2] Affidavit of Ms Kaye filed 25.08.2023 at paragraphs [10] & [13]. For ease of reference, in future the contents of this affidavit will be identified as ‘K’ with paragraphs identified numerically.
Against that background, it is unchallenged that:-
(a)the parties were living together in the Suburb C property by mid-2012[3];
(b)during the de facto relationship the parties made varying financial and non-financial contributions towards the acquisition, conservation, or improvement of the property in which either of the parties had an interest[4];
(c)the parties’ relationship ended when the de facto wife vacated the Suburb C property in May 2020[5];
(d)the de facto husband holds most of the parties’ superannuation and non-superannuation interests, with the balance of the parties’ property interests held in the de facto wife’s sole name[6];
(e)in March 2023, the de facto wife commenced these proceedings and at the time she was (and remains) a resident of New South Wales.[7]
[3] T-8 & 27
[4] See for example - K-42 to 70; T-31 to 48, 50 to 53
[5] K-4; T-8
[6] Exhibit ‘A’ - Joint Balance Sheet
[7] K-30, 31 & 77
On 11 April 2023, a consent order was made by the Court pursuant to s 44(5)(b) of the Act. With the quelling of the controversy about the de facto wife’s application being “out of time”, my task is to make an evaluative factual decision as to when the de facto relationship started and broke down, or in other words to determine a jurisdictional fact.[8]
[8] See Jonah v White [2012] FamCAFC 200; 48 Fam LR 562 at [32]
Section 4AA sets out the meaning of a de facto relationship. I am satisfied that the parties were in a relationship as a couple living together on a genuine domestic basis such that there was a de facto relationship between them from mid-2012 until May 2020. This is because neither of them was pressed about their competing evidence and whilst their evidence talks about when their relationship “commenced” it was not until after the de facto husband had purchased the Suburb C property that they both lived together in that home as their common residence and shared or enjoyed the benefit of financial dependence or interdependence: ss 4AB(2)(b), (d) and (e), 90RD and 90SB.
To the extent where there is an inconsistency about when the de facto wife moved in, it amounted to one month and in my view, the de facto wife’s unchallenged evidence was more persuasive in expressing not only the parties’ enthusiasm to move in together (with it being common ground that the de facto husband conferred with her about the purchase) but which was only able to be achieved upon her securing her own transport which both parties agreed occurred in mid-2012.
If I am wrong about that, for reasons that will be explored later in this decision, an earlier commencement date back to (say) late 2011 (as in part promulgated by the de facto wife) would have little bearing on the findings capable of being made about any change to the assessment of each party’s entitlement to a property adjustment order made within the context of an elongated de facto relationship.
Further and based on the de facto wife’s unchallenged evidence I am satisfied that the circumstances of both the de facto relationship and of the applicant (at the time she initiated these proceedings) satisfy the geographical conditions identified within s 90SK.
Consequently, I intend to make declarations to the effect that the Court has jurisdiction upon which to proceed to entertain the parties’ property adjustment application: ss 90RD & 90SK.
Both parties contended for a “global” approach to the parties’ interests: see Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17; 10 Fam LR 819 at 831 (‘Norbis’). In broad-brush terms the de facto wife sought a property adjustment order in her favour which allowed for her to (overall) receive about 40% of the parties’ superannuation and non-superannuation property interests while the husband sought an overall adjustment in his favour of 90:10.
Within that context, I have decided to adopt a global approach to the parties’ property interests because I am entitled to make orders that have the effect of adjusting the parties’ non‑superannuation property and superannuation entitlements according to different proportions: see Norbis, Lenehan & Lenehan [1987] FamCA 8; (1987) FLC 91-814 at 76,148, C & C [2005] FamCA 429; (2005) FLC 93-220 at 79,646, and Petrellis & Petrellis [2023] FedCFamC1A 104 at [21].
I now turn to the relevant issues foreshadowed earlier.
What does the balance sheet look like?
Because the parties invite me to make a property adjustment order (s 90SM), it is important that I understand what the parties are “worth”.
With that premise in mind, the High Court in Stanford & Stanford [2012] HCA 52; [2012] 247 CLR 108; (2012) 47 Fam LR 481, (‘Stanford’) at [35], said that s 79(2) provides that the Court shall not make an order altering parties’ interests to matrimonial property unless it is satisfied that, in all the circumstances, it is just and equitable to make the order. At [37] the High Court observed that:
First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of section 79(1)(a) itself, which refers to “altering” the interests of the parties to the marriage in the property … The question posed by section 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
Although Stanford related to a married couple, the principles apply equally to applications brought by de facto couples pursuant to Part VIIIAB of the Act.[9]
[9] See for example, Lotta & Lotta [2017] FamCA 50 at [281] – [290]
During the hearing, a balance sheet was tendered jointly by the parties[10] (‘the balance sheet’). So, having regard to the provisions of Part VIIIAB, what are the existing property interests of the parties, including their assets, liabilities, superannuation and financial resources – in other words what does the balance sheet consist of (that I know of given the de facto husband’s conduct)?
[10] Exhibit ‘A’
I use the phrase the balance sheet colloquially because (in reality) I break it down into two tables or a “his” and “hers” (so to speak) and then I calculate a short-form version which reflects the relevant totals drawn from the two tables.
With the above in mind, the de facto wife’s property interests have been reproduced with asterisked items being those that remained in dispute with my reasoning following:
Table 1 – schedule of de facto wife’s property interests
Description
Value ($)
Total ($)
Assets
Region O property (1% interest)* [11]
8,500
Motor Vehicle 1
11,000
Various bank accounts (CBA #...34 $672 + NAB #...41 $102 + NAB #...48 $2 + NAB #...71 $14,538)
15,314
Total assets
34,814
Liabilities
CBA Credit Card #...94
(114)
F Company Loan #...19
0
Student loan
(29,406)
Mortgage over the Region O property (50% interest)
(321,287)
Total liabilities
(350,807)
Superannuation
Super Fund 2
60,887
Total superannuation
60,887
Nett property
($255,106)
[11] K-79 & 80
* Not agreed
Drawn from the same sources, the de facto husband’s property interests have been reproduced:
Table 2 – schedule of de facto husband’s property interests
Description
Value ($)
Total ($)
Assets
Suburb C property
950,000
Motor Vehicle 2
19,350
Various G Bank accounts (#...86 $8,455 + #...21 $2,355)
10,810
H Bank account #...03
166,931
J Bank account #...68
0
Motor Vehicle 3
69,950
Motor Vehicle 4
1,500
Total assets
1,218,541
Liabilities
G Bank Credit Card
(2,242)
J Bank Credit Card
(2,284)
P Company Credit Card
(2,307)
K Company Loan
(103)
Motor Vehicle 3 Finance
(108,302)
Total liabilities
(115,238)
Superannuation
Super Fund 1
383,184
Total superannuation
383,184
Nett property
$1,486,487
Relying on the information set out in the above tables, the property pool consists of:-
·Nett total non-superannuation property $ 787,310
·Total superannuation interests $ 444,070
·ESTIMATED TOTAL PROPERTY POOL $ 1,231,380
I will now consider the non-agreed item, identified above.
The Region O property
It was unchallenged that the de facto wife has re-partnered with Mx L and earlier this year, the pair bought the Region O property.[12] The legal interest held by the de facto wife is 1% held as tenants in common, although she is jointly and severally responsible for the mortgage secured over the Region O property[13]. Under cross-examination the de facto wife confirmed her written evidence[14] that she intends to contribute most (if not all) of any cash she receives by way of property adjustment into paying down the mortgage secured over the Region O property.
[12] K-76, 79 & 80
[13] Reflected in the 50% liability attributed to the de facto wife within the joint balance sheet at exhibit ‘A’.
[14] K-82
The de facto husband contended that the balance sheet should reflect the value of the de facto wife’s gross interest as being 50% or $425,000. The de facto wife contended for the value being ascribed at $8,500 or 1% (reflecting the de facto wife’s legal interest). I accept the de facto wife’s contention because at the trial, the de facto wife only has a legal interest of 1% (and not 50%) of the value in the Region O property.
However, if I leave the situation “as is” then the value of the wife’s property interests will be skewed by the parties’ agreed value ascribed to the de facto wife’s interest in the mortgage liability over the Region O property. This is an artifice. To leave this contrived circumstance “as is” would not be just and equitable and so I turn to consider whether it is appropriate to reflect the de facto wife’s evidence as being more aligned with her ultimately owning 50% of the Region O property.
As opined by the High Court in Hall[15] -
54. The reference to "financial resources" in the context of s75(2)(b) has long been correctly interpreted by the Family Court to refer to "a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency”. The requirement that the financial resource be that "of" a party no doubt implies that the source of financial support be one on which the party is capable of drawing. It must involve something more than an expectation of benevolence on the part of another. But it goes too far to suggest that the party must control the source of financial support. Thus, it has long correctly been recognised that a nominated beneficiary of a discretionary trust, who has no control over the trustee but who has a reasonable expectation that the trustee's discretion will be exercised in his or her favour, has a financial resource to the extent of that expectation.
55. Whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual inquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it.
(excluding footnotes)
[15] Hall & Hall [2016] HCA 23 at [54]
In cross-examination, the de facto wife contended that she had no expectation that she would have a 50% interest in the Region O property, despite agreeing that if she received a property adjustment cash payment of (say) $300,000, she would contribute this sum to the existing mortgage over the same property. This evidence appeared to be inconsistent with her own financial interests and at odds with her financial statement which identified that she held a 50% share in the Region O property ($425,000).[16] When pressed on the inconsistency, the de facto wife said that “perhaps I got confused with the wording”. I reject this explanation as being implausible. Why would the de facto wife pour most or all of any property adjustment cash payment she receives into a mortgage which she is jointly and severally responsible for and not expect an increase in her equitable interest in the asset secured by the mortgage?
[16] Financial statement of Ms Kaye filed 20.09.2023 at item 35. For ease of reference, in future the contents of this financial statement will be identified as ‘FSW’ with parts and items identified either alphabetically or numerically (as the case may be).
From the evidence before me, it is reasonable[17] for me to I infer that upon receipt of any cash payment by way of property adjustment, the de facto wife will make a significant contribution towards reducing the mortgage liability with a consequence being that she will have an expectation to be entitled to half of the value of the Region O property should she make a call of that nature.
[17] See Benson & Drury [2020] FamCAFC 303; (2020) 62 Fam LR 1 at [50]
Accordingly, I have ascribed 49% or $416,500 of the total value of the Region O property as a financial resource in favour of the de facto wife.
If I am wrong about this, then it seems to me by acting in the contrived manner that she has, it would be open for the Court to make an adverse finding against the de facto wife when reflecting on whether the proposed property adjustment order is “just and equitable”. This is because her actions would, in my view, readily meet the criteria of ‘waste’ in accepting a disproportionate amount of mortgage debt versus a miniscule amount of legal title in the Region O property. By any measure, I am satisfied that the Court could find that the de facto wife has embarked on a course of conduct designed to reduce or minimise the value of the property pool (or more precisely – her nett equity in that pool) or that she has otherwise acted recklessly, negligently or wantonly in making the post-separation decisions she has that have had a profound deleterious effect on the value of the property pool: In the Marriage of Kowaliw [1981] FamCA 70; (1981) FLC 91-092 (‘Kowaliw’) at 76,644.
Finally, through the context of my above findings and my ultimate treatment of the financial resource later in this decision, I observe that it would be unconscionable for there not to be a finding that there is a constructive trust in favour of the de facto wife in relation to her interest in the Region O property because of either her direct or indirect contributions towards supporting Mx L in his income earning endeavours used to either acquire the Region O property in the first place, and/or the payment of the ongoing fees, repayments and expenses related to its conservation as well as the anticipated lump sum payment that the de facto wife intends to make following my judgment: see for example Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583; (1985) 11 Fam LR 930 and Baumgartner v Baumgartner [1987] HCA 59; (1987) 154 CLR 137; (1987) 11 Fam LR 915
Why does the de facto wife ask the Court to make a property adjustment order?
Both parties agree that the property pool needs to be adjusted.
The Court may rely on the factors set out within s 90SM(4) to inform its inquiry about the justice and equity of making property adjustment orders pursuant to s 90SM(3): see Bevan & Bevan [2013] FamCAFC 116; (2013) 49 Fam LR 387 (‘Bevan’) at [83] – [89], [163], [169], [171]-[172]).
The parties’ circumstances include that they no longer live together, the de facto husband holds a significantly greater proportion of assets (in his name) than does the de facto wife and there has not been a common use (or benefit) from their collective property interests for years.
The undertakings and assumptions that governed the use of their property ended with the parties’ separation in May 2020.
I find that it is just and equitable that an order be made to adjust the parties’ interests in their property: see Stanford at [35] and Bevan.
What were the direct and indirect financial and direct and indirect non-financial contributions of the parties and how should the Court assess them?
It was common ground that during the relationship the de facto husband was employed on a full-time basis.[18] The de facto husband says that he has historically worked for M Company and continues to do so.[19] The de facto wife says that at the start of the relationship she was still studying and until 2016 she worked part-time as well as studying.[20] In 2016, the de facto wife says she completed her studies and secured full-time employment.[21] It was common ground that the de facto husband paid for the deposit ($43,444) and purchase costs of the Suburb C property (for example stamp duty) and at least up until 2016, he was solely responsible for the mortgage repayments.[22]
[18] K-54
[19] T-3
[20] K-21 & 54
[21] K-56
[22] T-24 & K-56
Insofar as initial contributions were concerned, the de facto husband’s largely unchallenged evidence was that he brought in non-superannuation property totalling about $73,500 and superannuation of $51,000.[23] Certainly, the de facto wife concedes that there was nominal equity ($43,500) at the time the parties commenced co-habitation.[24] From what I can make of her evidence (given she unsuccessfully contended for a different commencement date for the de facto relationship), the de facto wife had a car, some savings and superannuation and a student debt amounting to a minimal nett value in total.[25] Even if I am wrong about when the de facto relationship commenced and it is rolled back to sometime in 2011, the disparity in these initial contributions would remain the same because the de facto wife was engaged in full-time study and the de facto husband was in full-time employment meaning he had greater access to cash and the superannuation guarantee.
[23] T-31
[24] Exhibit ‘W1’ at [8]
[25] K-42
Given the agreed facts, it is safe for me to find that the de facto husband made the overwhelming financial contributions towards the acquisition, conservation and improvement of the parties’ property. I accept that where she could, the de facto wife did make financial contributions but these pale against those made by the de facto husband.
I am also satisfied that both parties made non-financial contributions towards the property pool and that there is insufficient evidence for me to differentiate between my assessment of each party’s non-financial contributions.
In summary, the parties were once a young aspirational couple who worked hard in paid and unpaid endeavours to further their financial security.
Consistent with his occupation, in his written and oral evidence, the de facto husband presented as very much focused on me conducting what has sometimes been described by superior courts as an “accounting exercise”. As his senior counsel and his lawyer would be aware, that is not my task and rather my job is to approach findings about such things as contributions in a holistic manner: Fields & Smith [2015] FamCAFC 57; (2015) 53 Fam LR 1 (‘Fields & Smith’), Bryant CJ and Ainslie-Wallace J at [168]; Dickons & Dickons (2012) 50 Fam LR 24 (‘Dickons’) at [24]-[26]
There is a long line of cases that have considered how to assess and weigh initial financial contributions through the prism of a relationship and the rubric of the other financial and non‑financial contributions made by parties that flow from that circumstance: see Jabour & Jabour [2019] FamCAFC 78 at [55].
In assessing each party’s contributions, the length of the relationship is important, particularly when it is evident that capital contributions made early are a dominant feature of the assessment: see Wallis & Manning [2017] FamCAFC 14 at [117].
In light of the comments of the Full Court in Pierce v Pierce [1998] FamCA 74; (1998) 24 Fam LR 377; (1999) FLC 92-844 (‘Pierce’) at [28], self-evidently by her shared occupation of the Suburb C property, the de facto wife has received a benefit although for about the last four (4) years of the relationship she also made regular contributions towards the mortgage (via payments direct to the de facto husband)[26].
[26] K-56
Having regard to Pierce and Gadhavi & Gadhavi [2023] FedCFamC1A 117; (2023) 67 Fam LR 174 at [33], when I considered the father’s contribution via the Suburb C property (which appeared to amount to an initial contribution of about $43,500), I have done my best to not only trace the use of that interest but I have also considered the foundation that the contribution laid for the subsequent accumulation of property by the parties. In this case, the accumulation of property found expression in the capital increase in the value of the Suburb C property from $437,000 in 2012 to $950,000 in 2023[27] which based on the parties’ evidence (or lack thereof) about their contributions and any effects these had on the overall increase in value) was disproportionate to any improvements or conservation works carried out by them[28].
[27] T-22 and Exhibit ‘A; at item 1
[28] See for example T-48 to 50 & K-65 to 70
In addition, I accept the de facto husband’s submission that post-separation his savings have increased by about $120,000 without any contribution by the de facto wife[29] and I have taken that significant contribution into account.
[29] Exhibit ‘H1’ at page 5
It is somewhat difficult to assess the contribution the de facto wife has made via the Region O property given the unique circumstances of her ownership in that property.
It also important for me to reflect on the parties’ contributions towards their respective superannuation entitlements, particularly through their working histories.
The de facto wife did not commence full-time employment until about midway through the relationship and again, this circumstance is reflected (in part) in her superannuation balance.
The de facto husband has always worked full-time and in more recent times, he has been able to secure promotions into higher paid positions. As a consequence, inevitably his superannuation interest (in part) reflects the contributions generated from that income, including post-separation when the de facto wife would have made no direct contribution[30].
[30] Exhibit ‘H1’ at page 5
I say “in part” because I take judicial notice as to the reality that decisions the fund managers and the parties each make about the level of risk they wish to take in generating income from their respective capital components (at the start and end of the de facto relationship and afterwards) must also play a part in the current balance of each party’s superannuation interest as specified in the tables set out earlier in this decision. In making this observation, I note that there was no expert evidence to suggest otherwise.
Evaluations as to contributions inevitably involve value judgments and matters of impression and accordingly the evaluation of contributions cannot be treated as a mathematical exercise: see Lovine & Connor and Anor [2012] FamCAFC 168 (‘Lovine & Connor’) at [40] & [41], Petruski & Balewa [2013] FamCAFC 15 at [49] and Blandford & Esmore [2022] FedFamC1A 67 at [14].
Without conflating ss 90SM(3) and 90SM(4)(a)-(c), when I weigh up and assess the myriad of contributions towards their non-superannuation and superannuation interests that these parties have made within the partnership that was their de facto relationship before, during and after separation some time ago, I assess the de facto husband’s contribution at 80% and the de facto wife’s contribution at 20%. In summary the main issues that influenced my discretion were:-
(a)The agreed initial financial contribution made by the de facto husband which remains the most significant asset in the property pool;
(b)The post-separation contribution made by the de facto husband to the Suburb C property, his savings and his superannuation;
(c)The indirect contributions each party made towards the acquisition, conservation and improvement of the Suburb C property.
Are there any relevant future needs?
Sections 90SM(4) and 90SF(3) set out the legislative framework which informs my consideration, from which the following matters have been taken into account as being relevant to the parties.
There is a disparity in the parties’ incomes who both hold full-time positions. The de facto husband remains employed with the institution known as M Company, having recently been appointed as a professional[31]. He earns $265,000 per annum and receives the benefit of unspecified employer-funded superannuation guarantee contributions.[32] The de facto wife is employed as an administration officer with N Company, earning $66,000 per annum and although she does not depose to it; presumably she too receives the benefit of unspecified employer-funded superannuation guarantee contributions.[33]
[31] T-3
[32] Financial Statement of Mr Tait filed 25.08.2023 at item 9 & T-3. For ease of reference, in future the contents of this financial statement will be identified as ‘FSH’ with parts and items identified either alphabetically or numerically (as the case may be).
[33] K-72 & FSW-9
Through the prism of her university degree and her evidence about the difficulties she has in securing employment in that field,[34] the de facto wife was cross-examined about whether she is truly exercising her full potential income earning capacity. I found the de facto wife’s evidence to be plausible and I am satisfied that despite not being employed in the field of her degree, given her living arrangements and the unavailability of employment opportunities nearby, the de facto wife is exercising her gainful employment opportunities as best she can.
[34] K-73
The de facto husband is in a committed relationship but does not live with that person and does not have financial responsibilities for that person, nor does he receive any financial benefits from the relationship.[35] The de facto wife lives with Mx L and deposes to him earning $2,884 per week or $105,000 per annum.[36] The mortgage repayments over the Region O property amount to just under $1,000 per week with the de facto wife paying $200 per week towards those payments and Mx L paying the rest.[37] I am satisfied that the de facto wife’s circumstances suggest that she is receiving direct financial benefits from her relationship with Mx L even though the quantum is not properly articulated within her financial statement.[38]
[35] FSH-17, Parts F & H
[36] FSW-17 & K-76
[37] K-84 & 85
[38] FSW-Part F
I have had regard to the property pool and the financial resource that I have attributed to the de facto wife.
In Hobson & Hobson [2020] FamCAFC 251 (‘Hobson’), the Full Court in reflecting upon the decision in Mallet v Mallet (1984) 156 CLR 605 at 638, said that the purpose of a s 75(2) adjustment[39] –
is not to achieve equality in the financial strengths of the parties, nonetheless the overarching obligation is to achieve a just and equitable division of the property.[40]
[39] Read as ss 90SM(4)(e) & 90SF(3)
[40] Hobson & Hobson [2020] FamCAFC 251 at [32]
In Hobson the Court noted that under the orders made by the primary judge, the husband was left with two-thirds of the parties’ property but retained an earning capacity (gross $23,955 per week) which dwarfed that of the wife by a magnitude of at least ten (10) times. Whilst the Full Court focused much of their criticism on the primary judge’s interpretation of one aspect of Jabour and the consideration of the s 75(2)(k) factor, the Court also identified the imperative for the Court (when considering factors pursuant to s 90SF(3)) to reflect on what the proposed adjustment means in dollar terms and put that in perspective to the income earning capacity of the parties.
Here, I am satisfied that the de facto husband has an earning capacity of $265,000 per annum (plus superannuation) which is over four (4) times that earned by the de facto wife who will likely continue to earn a modest income. Reflecting further on Hobson, the disparity of income between the parties is stark but I also need to consider the other s90SF(3) factors including whether that income earning capacity has been impacted by the duration of the relationship which was only for eight (8) years –shorter than the 10-year relationship in Hobson and the reality that the de facto wife is in a committed relationship with Mx L from which she derives financial support and has the financial resource of her interest in the Region O property.
I am satisfied that an adjustment is warranted in favour of the de facto wife to the effect of the property pool being adjusted so that the de facto wife receives 25% overall. This is because:
(a)The de facto husband earns $265,000 per annum, and in the context of the property pool and the financial resource - the property adjustment orders I am considering would mean that his annual income is equivalent to about 88% of the entirety of what the de facto wife will receive by way of non-superannuation property and the financial resource;
(b)The de facto wife has the benefit/support of Mx L and the financial resource.
What outcome will be just and equitable?
The value of the property pool is $1,231,380 but as I alluded to earlier, because of the way the de facto wife holds her interest in the Region O property ($8,500) and the mortgage over it (-$321,286), this figure is skewed.
To properly consider whether the proposed property adjustment is just and equitable I have notionally included into my consideration the de facto wife’s financial resource ($416,500).
On that basis, the total of the property pool and the financial resource amounts to $1,647,880 out of which the de facto husband currently holds $1,486,487 including $1,103,303 in non‑superannuation property and $383,184 in superannuation. Conversely the de facto wife has non-superannuation property of -$315,993, superannuation of $60,887 and a significant financial resource of $416,500.
The de facto wife contends for a superannuation splitting order of $161,148.51 which, added to her existing interest of $60,887 means that overall, she would receive $222,035 in superannuation or half of the parties’ superannuation interests. The de facto husband does not contend for any adjustment. Neither position is just or equitable.
In my view, the 75:25 adjustment I have arrived at earlier remains just and equitable insofar as the parties’ superannuation entitlements. This is because:
(a)both parties are unlikely to be able to gain a direct benefit from their superannuation for many years to come;
(b)to the best of their capacity, each party indirectly supported the other in their income earning endeavours during the relationship which was a contributing factor to their superannuation balances now;
(c)the de facto wife (who has less capacity than the de facto husband to contribute to her superannuation) has asked for a superannuation splitting order; and
(d)to do so reduces the financial consequences upon the de facto husband in having to either deplete his savings (and the interest income earned on those funds) and/or his available income by paying off the de facto wife through borrowings.
To achieve a 25% adjustment to the de facto wife - from a total superannuation amount of $444,070, she needs to hold $111,017 in superannuation. As she already has $60,887, a superannuation splitting order of $50,130 is required.
Turning then to the non-superannuation property, and reflecting on the financial resource of $416,500, I remain satisfied that it is just and equitable to consider both the financial resource and the parties’ non-superannuation property. This is because the evidence satisfies me that whatever cash sum the de facto wife receives, she will be making a significant contribution to the mortgage over the Region O property. Why would she do that unless she considers (as she did within her financial statement) that she is responsible for not only half of the mortgage secured over the Region O property but is also entitled to a comparable proprietary interest as well (which, based on her inconsistent evidence, I find is 50%). To suggest otherwise (in the face of the evidence) is simply implausible.
So, what that means is that in combination these two categories total $1,203,810 and 25% of that figure is $300,952. At present, the de facto wife has -$315,993 in non-superannuation property and $416,500 as a financial resource equalling $100,507 overall. In my view a cash adjustment of $200,445 is a just and equitable outcome because:
(a)the wife’s intention is to contribute most (if not all) of any cash receives into the mortgage secured over the Region O property which logically means that her equitable interest in that property will increase substantially above her existing legal interest of $8,500;
(b)the de facto husband should not be prejudiced by me adopting an artificial approach to what property (versus financial resources) the de facto wife has access to because to do so would unfairly skew the property pool with unintended consequences;
(c)whether the de facto wife now agitates with Mx L for an adjusting transfer of legal title (or another legally binding way of doing so) to better reflect her newly found financial capacity is entirely up to her and is not something that either this Court or the de facto husband can promulgate on her behalf. Put another way, the de facto wife has a reasonable expectation because she can call on it now that she has the cash to do so.
From the de facto husband’s perspective, the outcome is also just and equitable because he has the ongoing benefit of an income over four (4) times that of the de facto wife which history would suggest he will use thriftily to secure his financial future. In addition, he has available to him cash reserves of close to the cash adjustment I have assessed he should pay so there may be no need for him to obtain more credit at all. Ultimately though, the de facto husband, with a nett income of over $5,000 per week will retain non-superannuation property valued at over $900,000 with (at worst) a mortgage of just over a fifth of the equity in the Suburb C property; although as I set out earlier, given his financial intelligence, I apprehend the de facto husband will do all he can to satisfy my order from cash reserves rather than source a line of credit with all the costs that go with it.
As for his superannuation, after the superannuation splitting order is effected, he will have an interest valued at about $330,000 and the ongoing benefit of significant superannuation guarantee employer contributions to bolster that sum into the future.
So overall having weighed up the parties’ circumstances and the way I can make property adjustment orders to reflect same, I am satisfied that my assessment will achieve a timely severance of the parties’ financial relationship on just and equitable terms. Failing which, if the de facto husband cannot secure the funds to pay to the de facto wife, then the Suburb C property can be sold.
CONCLUSION
Accordingly, the orders set out at the commencement of these reasons, in the form as prescribed, will achieve an alteration of the parties’ proprietary interests which is just and equitable.
If I did not make an order as sought, that is because there was insufficient evidence upon which I could make a finding to support such order. In addition, I have made the usual orders in relation to enforcement of the orders (so as to reduce the prospect of further litigation): s 106A.
If a costs application arises from this judgment, I have also made some procedural orders to promote efficient case management.
In the circumstances, and for these reasons, the court makes property adjustment and procedural orders as specified.
I certify that the preceding eighty-six (86) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Kearney. Associate:
Dated: 8 December 2023
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