King & King (No 2)
[2023] FedCFamC1F 45
•8 February 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
King & King (No 2) [2023] FedCFamC1F 45
File number(s): MLC 9554 of 2011 Judgment of: BAUMANN J Date of judgment: 8 February 2023 Catchwords: FAMILY LAW – PROPERTY – Assessment of contributions – Where the parties have been litigating for over 11 years – Where scarce evidence has been produced by the parties as to their contributions and financial arrangements during their 29 year relationship – Where the wife contends that two properties should be excluded from the pool as she holds the legal interest under a trust for the benefit of herself and her siblings – Where the Court is not satisfied there is an express trust – Orders made that achieve justice and equity for both parties Legislation: Family Law Act 1975 (Cth)s 75, 79, 81 Cases cited: Best & Best (1993) FLC 92-418
Biltoft & Biltoft (1995) FLC 92-614
Gosper & Gosper (1987) FLC 91-818
Hickey & Hickey (2003) FLC 93-143
King & King [2021] FamCA 603
Stanford & Stanford [2012] HCA 52
Division: Division 1 First Instance Number of paragraphs: 58 Date of hearing: 30 – 31 January and 1 February 2023 Place: Melbourne Solicitor for the Applicant: Ian Robertson Legal Counsel for the Respondent: Mr Rattray Solicitor for the Respondent: Ressan Lawyers ORDERS
MLC 9554 of 2011 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS KING
Applicant
AND: MR M KING
Respondent
order made by:
BAUMANN J
DATE OF ORDER:
8 FEBRUARY 2023
THE COURT ORDERS:
1.That each party retain all superannuation, long service leave, redundancy, retirement, retrenchment and like benefits belonging to each of them respectively to the exclusion of the other and each hereby forego all claims of whatsoever nature to such benefits, entitlements and the like retained by the other.
2.That within ninety (90) days from the date of these Orders, the Respondent pay to the Applicant the sum of four hundred and thirty-six-thousand dollars ($436,000) (“the payment”).
3.That in the event the whole of the payment pursuant to Order 2 hereof has not been made, the parties do all acts and things and sign all such documents as may be required to place the property situate at T Street, Suburb H in the State of Victoria (“the Suburb H property”) on the market for sale on such terms as agreed between the parties, and failing agreement as follows:
(a)Firstly, to pay the commission and legal fees, and any other agreed costs and expenses, of the sale;
(b)Secondly, to discharge the mortgage with Westpac Banking Corporation with dealing number …;
(c)Thirdly, to discharge the caveat with dealing number … (noting that any amount paid in respect of the caveat lodged on behalf of QQ Lawyers (a firm) be debited solely against the Applicant’s share of the proceeds); and
(d)The balance remaining so as to cause the following division of the pool of interests as set out at paragraph 30 of the Reasons for Judgment delivered 8 February 2023:
(i)60% to the Applicant; and
(ii)40% to the Respondent.
4.That until settlement, the Respondent be prohibited from drawing down/extending or re-mortgaging the Westpac mortgage currently registered (with dealing number …) against the Suburb H property.
5.That for the purpose of the sale of the Suburb H property:
(a)RR Pty Ltd is to be appointed as selling agent;
(b)the parties appoint ZZ Lawyers to act on their behalf in relation to the conveyance of the Suburb H property; and
(c)the Applicant have the sole conduct of the sale and keeps the Respondent informed as to the progress of the sale; and
(d)The Respondent to provide vacant possession seven (7) days prior to the settlement of the sale.
The Country GG properties
6.That the Applicant retain the real properties known as property SS Street City TT, Country GG and property UU Street City TT, Country GG.
7.That unless otherwise specified in these Orders and except for the purposes of enforcing the payment of any moneys under these or any subsequent orders:
(a)the Applicant will retain the funds in her sole bank accounts;
(b)the Respondent will retain the funds in his sole bank accounts;
(c)each party be solely entitled to the exclusion of the other property (including choses-in-action) in the possession or name of such party as at the date of these Orders save as provided for in these Orders;
(d)all insurance policies are to become the sole property of the owner names therein;
(e)each party be solely liable for the indemnify the other against any liability encumbering any items of property to which that party is entitled pursuant to these Orders and/or any liability in their respective names including however not limited to credit card debts and the personal loans; and
(f)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
8.That if Order 2 is complied with then the payment of $436,000 shall be deemed to include:
(a)an allowance for the costs payable by the Respondent to the Applicant pursuant to earlier costs orders in her favour; and
(b)a payment for arrears of spouse maintenance pursuant to the Order of the Court made 29 November 2011.
9.That if it is required to sell the property pursuant to Order 3 hereof, then in addition to the payment to be made to the Applicant under Order 3(d)(i), the Respondent shall pay to the Applicant from his share of the nett proceeds of sale:
(a)a payment of $26,397 in respect of earlier costs orders in favour of the Applicant; and
(b)a payment of $74,100 in respect of arrears of spouse maintenance.
10.That upon the payments made to the Applicant under either Order 8 or Order 9 hereof, the spouse maintenance Order made 29 November 2011 shall be discharged.
11.That the parties be at liberty to apply in relation to the sale of the Suburb H property.
12.That the Applicant be at liberty to make a copy of these Orders available as reasonably required to assist in the implementation of these Orders.
13.That the Court forthwith release each party’s passport/s that are currently held by the Court.
IT IS NOTED:
A.That pursuant to s 81 of the Family Law Act 1975 (Cth), the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.
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 the pseudonym King & King has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
INTRODUCTION
Despite commencing proceedings in 2011 (in both parenting and property issues), shortly after the second (and final separation), attempts to finalise these remaining property issues have been frustrated. The context for those delays – clearly exacerbated by the chronic mistrust between the applicant wife, Ms King and respondent husband, Mr M King, had meant, sadly, that issues were not clarified by the evidence offered to the Court.
The obligation of the Court, mindful of Section 81 of the Family Law Act 1975 (Cth), to make final orders that are just and equitable to both parties, has been challenged by the lack of discovery, as directed on numerous occasions; lack of probative evidence being adduced and, in some respects, the complete lack of any evidence on some critical issues in dispute being offered to the Court.
I made it clear to the parties who were legally represented – solicitor advocate, Mr PP for the wife and Mr Rattray of Counsel for the husband – that, despite at least six earlier final hearing dates having been scheduled (the first on 14 December 2015), this case had to conclude. No applications for an adjournment were, in any event, made to me.
PRINCIPLES
Shortly stated, but more concisely and elaborately described in the Full Court decision in Hickey & Hickey (2003) FLC 93-143, in a property settlement case, the Court must adopt a well-known four-step process, essentially:
(a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;
(b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s 79(4);
(c)to consider the factors as are relevant contained in s 75(2) of the Act; and
(d)finally, consider the ultimate analysis to determine whether the order the Court proposes to make is just and equitable to both parties.
MATERIAL RELIED UPON
The Applicant wife relied upon the material set out in her case outlined filed 23 January 2023, namely:
(a)affidavit of the wife filed 26 August 2022;
(b)affidavit of the wife’s sister, Ms WW filed 26 August 2022;
(c)affidavit of the wife’s father, Mr JJ filed 26 August 2022;
(d)affidavit of law clerk, Ms KK filed 11 October 2022; and
(e)affidavit of single expert valuer, Ms VV filed 19 October 2022.
I struck out the affidavit of the wife’s sister Ms WW, which Mr PP contended was corroborative of the wife’s evidence about the Country GG properties. The affidavit totally and entirely relied upon hearsay evidence. Furthermore, Mr PP indicated he no longer relied upon evidence of his law clerk, Ms KK, who, in late 2022, attended a business, where the husband, it is alleged by the wife, was working. That was a sensible concession by Mr PP.
Consistent with an order for a single expert to value the Suburb H home, an expert Ms VV, produced a valuation as at mid-2022. The husband’s case outline filed at 2.12pm on Friday, 27 January 2023, asserted that the husband says the property has a value of $1.1 million, although he adduced no evidence of value. When Mr Rattray was invited to get instructions from the husband, whether he wished, as he was entitled to do, cross-examine the single expert, ultimately he decided to cross-examine at short notice. The expert was called to give evidence by video.
The husband’s case outline, quite unhelpfully, identified a number of applications in procedural interlocutory disputes and supporting affidavits dating back to 2015 – including curiously contravention applications. Again, Counsel for the husband was invited to identify which affidavits his client relied upon that were still relevant to the current property issues.
By email to my Associate sent at 1.08pm on the first day of hearing (marked Exhibit 2), the husband said he only relied upon his affidavits filed 16 September 2022 and 19 October 2022. It was appropriate to note that whilst the solicitors (appointed via the s 102 NA cross-examination scheme), did not come on the record until 4 November 2022, no application was made to adduce further evidence in his case – at least an option that may have been enlivened by the Orders of Hartnett J made 24 October 2022. The scarcity of evidence became obvious when Mr Rattray was cross-examining the wife – and (although I accept generally cross-examination is that large) attempted to put to the wife a question, said to be based on his client’s case, about the husband making a contribution to the Country GG properties.
In an attempt to allow Counsel an opportunity to find any previous affidavit where the assertion put to the wife had been raised (Mr PP saying the assertion was entirely new to him.), I stood down, and did not discharge the wife, so as to allow Mr Rattray to locate any evidence that the husband had given as a foundation for his question. After we returned from lunch, during which the earlier email had been received, Mr Rattray properly conceded no such evidence by the husband had ever been given. The wife’s cross-examination was then concluded after less than 30 minutes in the witness box. Somewhat confusingly to Mr PP, who had been told the husband was the only witness in his case, the husband also relied upon an affidavit by his sister, Ms DD King, filed 24 July 2017. She was not the subject of cross-examination as I explain.
PROCEDURAL HISTORY
It is too excruciating to provide a fulsome recitation of the history in this matter (also, I acknowledge, involving some resolution of the parenting issues) suffice to say that my overview reflects that the proceedings comprised:
(a)at least six trial listings;
(b)at least nine different judges or registrars dealing with the matter;
(c)And Order made in 2013, which “struck out” the property proceedings application (with a right to reinstate), before the property proceedings were resuscitated on the application of the wife filed in June 2014;
(d)too many orders for specific discovery to count;
(e)at least four contravention applications, mostly dismissed, except for an Order by Bennett J on 1 August 2017 where the wife was found to have contravened a parenting order, and was placed on a two year bond;
(f)a successful application (after an unsuccessful application) to remove a number of parties from the proceedings for the Reasons articulated by Hartnett J on 13 August 2021 (see King & King [2021] FamCA 603);
(g)a number of costs orders made and reserved;
(h)At least 34 Court events; and
(i)an unsuccessful judicial settlement conference before the Chief Justice and an earlier Conciliation Conference.
As required in explaining the pathway to what orders I regard and find are likely to achieve justice and equity to both parties, I will refer to some of the orders previously made in these proceedings.
CONTEXTUAL FAMILY HISTORY
Statements of fact which follow should be construed as findings of fact.
The wife was aged 20 years, and the husband was aged 24 years when they first married in early 1994. There is no evidence to suggest, as a young couple, either had any assets of significance which they initially contributed.
The couple were blessed with the birth of three daughters:
(a)C in 1996 (now 26 years of age);
(b)D in 2003 (now 19 years of age); and
(c)E in 2006 (now 16 years of age).
I infer the marriage was not always a happy one, at least demonstrated by the fact that:
(a)they separated in 1997 and divorced shortly thereafter; and
(b)they reconciled in 2003; remarried in early 2003, and finally separated in August 2011.
The second divorce order was made in late 2018.
As I identified during the course of the final hearing, neither party in their trial material chose to give any substantial evidence about the contributions and financial arrangements during the whole of the relationship from 1994 until the trial before me – a period of 29 years including the period of separation between 1997 to 2003 (six years). As C was only a baby when the couple first separated, it is reasonable to infer, the child remained primarily in the wife’s care until reconciliation when C was about seven years of age.
The material before me, and the parties’ brief cross-examination in some respects identifies very active, commercial undertakings by the parties – including a business in the produce industry; and a wholesale business. I was not favoured with much evidence about their earlier days, although findings about some of those activities were made by Hartnett J in her Reasons for Judgment of 13 August 2021 (see King (supra)), when her Honour was determining an application by Mr B King, Ms DD King, King Investments Pty Ltd and P Pty Ltd, to be removed as parties to the proceedings. The application was granted and since that time, relevantly in my view, Ms DD King has not sought leave to intervene in the proceedings or sought any orders, or findings, which might have assisted her in supporting the caveat she has filed over Suburb H property. The same can be said for the parties’ eldest child C, who has also claimed an interest in the Suburb H property sufficient to support her caveat. In any event, the Reasons of Hartnett J provided the following summary which I incorporate and adopt in these Reasons, being paragraphs 13 to 27 of the earlier Reasons for Judgment:
13During the period of the parties’ first marriage and between 1994 and 1998 the Respondent conducted a [produce] business.
14The corporate entity [A Pty Ltd] was registered in 2002 with the Applicant wife as the sole director and shareholder as claimed by the wife. The business run by that corporate entity was a wholesale […] business. The Respondent husband operated that business and mostly, as claimed by the wife, dealt in cash.
15It is the wife’s claim that in or about December 2002 a warehouse property situate at [2 M Street, Suburb G] in the state of Victoria (the “[2 M Street] property”) was purchased for the sum of $220,000 by or on behalf of the husband and wife but registered in the name of the husband’s brother-in-law, the Second Respondent.
16The wife claims that the purchase price of $220,000 derived from funds provided by the husband. The husband denies this. Settlement for the property occurred [in] 2002. No mortgage was required with respect to the purchase of the property and it was unencumbered. The wife claims the husband told her he intended to operate the business [A Pty Ltd] from the property, and that the property was held in the name of his brother-in-law, the Second Respondent, for “asset protection” purposes.
17When the [2 M Street] property was subsequently rented out, the rental income was, as claimed by the wife, paid to [A Pty Ltd]. Subsequently, from on or about 2006, the rental income was paid to the Second, Third and/or Fourth Respondents as claimed by the wife. The Fourth Respondent is a corporate trustee of a self-managed superannuation fund, the members of which are the Second and Third Respondents. The wife claims the rental income is held on trust by the Second, Third and/or Fourth Respondents on behalf of the husband and wife, and makes other claims in the alternative.
18In 2005, the husband travelled to [Country GG] and arranged for two properties in the name of the wife’s parents to be transferred into the wife’s name. The wife’s parents continue to meet the expenses of the properties, and to receive the income from the properties. The wife claims she holds these properties on trust for her parents.
19In or about June 2006 a property situate at [1 M Street, Suburb G] was purchased for the sum of $270,000. It was registered in the name of the Second Respondent. The wife claims this property’s purchase was paid for in full with cash from [A Pty Ltd] and no borrowings were again required. The wife claims that the property and the rental income derived from it are held on trust for the Applicant wife and Respondent husband.
20In 2007, the wife claims the husband negotiated on behalf of [A Pty Ltd] to obtain a lease for a retail […] business. It was called “[Retail A]”. The shop was known as [Shop F1].
21In 2010, the wife claims [A Pty Ltd] entered into a lease for another […] outlet known as [Shop F2]. This outlet was called “[Shop HH]”. The Applicant wife claims she was unaware of this lease during the marriage.
22In or about [late] 2010, without informing the wife as claimed by the wife, the husband transferred the business of [Retail A] to [King Properties Pty Ltd], a company controlled by the Third Respondent. The wife claims the Third Respondent held the business of [Retail A] on trust for the husband and wife together with any profits derived from that business. In or about [mid-2013], [King Properties Pty Ltd] sold the business known as [Retail A]. On or about [mid-2013] the settlement of the sale of the business of [Retail A] took place with an amount of [over $500,000] being paid to [King Properties Pty Ltd] as claimed by the wife. The wife claims the Third Respondent holds the proceeds of sale of the business on trust for the husband and wife.
23In or about 2010, the husband, without informing the wife as claimed by the wife transferred the business of [Shop HH] to [Ms FF], a friend of the husband. [Ms FF] subsequently transferred the business to [King Properties Pty Ltd], a company controlled by the Third Respondent who is the Respondent husband’s sister.
24On 11 February 2011 the Second and Third Respondents indicated a willingness in correspondence to the husband and wife, as claimed by the wife, to transfer the titles of the [1 M Street] and [2 M Street], [Suburb G] together with the two […] businesses to the husband and wife in return for a payment from them in the sum of $222,176.
25In 2011, the husband purchased a property at [T Street Suburb H] for $565,000. The property was registered solely in the husband’s name as claimed by the wife.
26[In late] 2011, liquidators were appointed for [A Pty Ltd]. A number of assets of [A Pty Ltd] were never accounted for and/or were sold by the husband as alleged the wife.
27[In early] 2012, the husband signed a contract of sale for the purchase of a warehouse at [EE Street], [Suburb G]. The purchase price was [over $1,000,000]. In [mid-2012], settlement of the sale occurred. The property was at that time registered in the name of [O Pty Ltd]. [O Pty Ltd] was a company of which the Third Respondent was the sole director and shareholder. [In mid-2019], the property was sold for [over $1,600,000]. That sale preceded the company’s liquidation in [mid-2020]. These are matters now for the liquidator.
As I was not invited in final submissions to make any other findings about those historical issues, I choose not to do so.
The pool, as discussed below, identifies there are two property purchases that are of relevance now to a proper determination of this matter, namely:
(a)the purchase of the property at T Street, Suburb H (“the Suburb H property”) in 2011; and
(b)the two units situated in Country GG transferred to the wife by her parents in 2005.
Furthermore, at the commencement of the trial before me, as is apparent from the husband’s case outline filed 27 January 2023, the husband asserted a number of liabilities should be taken into account, being:
(a)outstanding rates, charges and land tax obligations attaching to the Suburb H property totalling $28,823.35;
(b)Loan from C of $570,000; and
(c)Loan from Ms DD King of $270,000.
I deal with the asserted transactions underpinning these alleged liabilities further in these Reasons.
Sadly, the evidence makes clear that the adult daughter C is estranged from the wife (and possibly her sisters), and the two younger children are estranged from the husband. It is abundantly obvious that the stress and pain associated with these lengthy proceedings have had a profound effect on this family, and only exacerbated the high and chronic levels of mistrust and conflict between them. Although this matter was not a matter likely to be mediated successfully, as I soon note, both parties did by final submissions significantly alter their initial positions.
It is appropriate that I make some comments and findings on the reliability of the parties’ evidence. I hold no real concerns that the wife, although clearly embittered, provided the Court honest and believable evidence. There were some inconsistencies, but they were not material and, in some ways were shaped by the wife’s entrenched negative perception of the husband.
The husband, by comparison, was vague and unresponsive. Furthermore, he at times seemed to provide a version of facts, for the first time, under cross-examination. I am satisfied he did not comply at all times with orders made for discovery. His constant refrain that, as an unrepresented litigant, he did not know what he was meant to do, is not accepted by the Court. Probably the two glaring examples of his concerning testimony were:
(a)an allegation that the parties in 2005 had paid either $100,000 or $200,000 (his evidence was vague) to the wife’s father for the purchase of the two units in Country GG. Not only was such allegation not contained within the trial affidavits of the husband; or was any document to support the allegation produced (for example bank records, etc), but that allegation was never put to the wife or her father in their cross-examination. My impression was the husband’s Counsel was completely taken by surprise by the husband’s assertion in cross-examination. I do not accept the husband’s evidence on this issue; and
(b)having maintained consistently that C had (as his case outline asserted – which of course is not evidence) “contributed approximately $520,000 by way of renovations to the [Suburb H] property, and approximately $150,000 by way of mortgage payments since 2016“– the husband, despite earlier orders for discovery, produced no documents at all to support this assertion or, relevantly, no evidence from C. In particular, the Court has no evidence, if what the husband asserts is true, of the source this 26-year-old woman had available when she was around 20 years of age for such a large sum of money. The fact that in final submissions his Counsel conceded the husband had not adduced any evidence to support the claim, and therefore did not press for the “liability” to be taken into account, did the husband no credit at all. It is of course concerning that as recently as his Financial Statement sworn 19 October 2022 (at item 50), he swore that he owed $650,000 to C.
As a result, I treat the husband’s evidence with some significant reservation and find, in the absence of probative corroboration, some of his evidence on a material fact cannot be accepted. More generally, where the evidence of the wife conflicts with the evidence of the husband, I generally prefer to accept the evidence of the wife.
I acknowledge that during much of these proceedings, the husband was not legally represented. He may have been at times confused about court processes. However, the solicitors for the husband (appointed pursuant to the s 102NA scheme) came on the record for him on 4 November 2022 – which was more than adequate time for some of the critical forensic aspects of this case to have been attended to with probative evidence – if available.
I am satisfied, as is clear from the cases prosecuted by both parties, that it is just and equitable to make an order (s 79(2) and Stanford & Stanford [2012] HCA 52).
POOL
Taking on board various concessions made in final submissions, I find the interests and liabilities of the parties at the date of hearing to be as follows:
Ownership
Property
Value
Husband
T Street, Suburb H
$1,300,000
Wife
SS Street City TT, Country GG
$107,332
Wife
UU Street City TT, Country GG
$119,354
Wife
Superannuation Fund 1
$27,308
$1,553,994
LIABILITIES
Husband
Westpac (as per Exhibit 6)
$471,401
Balance
$982,593
In respect of some of the items included or excluded in the above balance sheet, I make these findings:
(a)Value of the Suburb H property. After the cross-examination of the single expert valuer Ms VV, by final submissions her expert opinion of value as at mid-2022 was adopted by the husband. The husband produced no adversarial evidence as to the value of the home in any event;
(b)The husband accepted the valuations of the two Country GG units, as advanced by the wife. The wife, however, contends that the two properties should be excluded from the pool as she holds the legal interest under a trust for the benefit of herself and her siblings. The husband, whilst disputing the wife’s trust argument, also in the course of his cross-examination (and for the first time) asserted that the husband and wife had paid the wife’s father, Mr JJ either $100,000 or $200,000 to purchase the properties from him and his wife (who has since passed away). I had the benefit of hearing cross-examination of Mr JJ (with the assistance of an interpreter), and on the balance of probabilities and on all the evidence, I find that:
(i)Mr JJ purchased the properties in Country GG with the proceeds of retirement/redundancy benefits he received after late2000 when he had finished working for XX Pty Ltd;
(ii)Mr JJ’s prime intention in purchasing the properties was because he and his wife were planning to live in Country GG on his retirement. Sadly, Mr JJ’s wife was diagnosed with terminal illness, and he said, in cross-examination, that his hope now is that his children may use the property to take a holiday in Country GG;
(iii)it is common practice, it seems, that a non-resident of Country GG appoints a person in Country GG as their attorney with powers to deal with the property on behalf of the non-resident. At the time of the purchase, Mr JJ granted to his brother in Country GG a power of attorney, however, Mr JJ deposed (at paragraph 6), that “circumstances led to my loss of trust in him”. Mr JJ decided, to protect the asset from his brother, to transfer the two properties to his daughter (the wife in these proceedings);
(iv)to facilitate that transaction, Mr JJ granted a power of attorney to the husband in mid-2005, and also gave the husband $15,000 to enable him to travel to Country GG and perfect his intention to transfer the properties to the wife. I am not satisfied there is any evidence to rebut the presumption – in fact clear intention – that Mr JJ wanted the legal interest in the property to vest in his daughter (see Gosper & Gosper (1987) FLC 91-818);
(v)The legal interest passed and Mr JJ (or his wife) continued to pay all the rates and charges on the property;
(vi)At paragraph 11, Mr JJ says:
The [Country GG] properties are in my [d]aughter [Ms King’s] name on the condition that they are not to be sold without my authority, we are to have the full benefit of these during our lifetimes and are to form part of my [w]ife’s [e]states, we placed these in my [d]aughter [Ms King’s] name as we believed that we could trust her and upon the passing of both me and my wife that these properties be shared equally between our four (4) children.
I accept that is Mr JJ’s hope, one acknowledged by the wife, but as a matter of law, and in the absence of anything expressing – at the time of the transfer or since – in writing, the creation of an express trust, I am not prepared to exclude the legal interest the wife has from the pool of interests. There is no real legal right that the siblings of the wife have to enforce an interest in the properties;
(vii)I accept the wife may genuinely regard herself as holding the properties under a form of family arrangement or moral obligation, but the evidence does not reach the level of establishing an enforceable trust. As will be observed, however, I do not ignore the moral claim the wife feels duty-bound to uphold. At this time, I regarded it as a gift to the wife, to which the parties have made no contribution, and as a result, a contribution made by the wife to the pool of assets.
(c)Although it appears all of the wife’s superannuation benefits have accrued post final separation, the modest balance should be included, adopting the usual principles. Mr PP submitted the Superannuation Fund 1 should be excluded to “offset” against the use the husband has made of his superannuation. Rather than including an amount of $45,000 in the pool as notional property, relying on item 45 in the husband’s Financial Statement sworn 20 January 2015 (Exhibit 3), I will also discuss this issue when considering s 75(2)(o) below;
(d)Current arrears of rates and land tax should not be brought into account in the pool where the husband has been occupying the property for 10 years and has the legal obligation as registered proprietor to pay those charges;
(e)In respect of the asserted loan of $270,000, the husband says he owes his sister, Ms DD King, I find that:
(i)the husband has produced no evidence to reveal any funds passing from his sister to himself; no document in writing evidencing a loan; no evidence that reveals if a loan was made how it was spent, and when;
(ii)Although Ms DD King was, at one time a party to the proceedings, she (along with other parties connected with the husband), filed an application to be removed from the proceedings. By Order of Hartnett J made 13 August 2021, Ms DD King was removed as a party. The affidavit the husband relied upon in his case outline from Ms DD King filed 24 July 2017, related to other issues and did not depose to any loan having been made to the husband. After Ms DD King was removed from the proceedings as a party, she may have been entitled to seek to intervene, seeking an order or declaration about payment of the said loan – if for no other reason than to attempt to support a caveat she has lodged against the Suburb H property, asserting a caveatable interest; and
(iii)For the reasons given, the husband has failed to discharge the evidentiary onus to establish a loan exists, or even if it did exist, that it will be the subject of demand or actions for recovery (see Biltoft & Biltoft (1995) FLC 92-614).
The asserted loan is therefore not included in the pool of interests.
CONTRIBUTIONS
This was a long marriage of over 28 years, albeit interrupted by the separation for six years before remarrying.
The wife, I find, was the primary homemaker and parent to the parties’ three daughters until C decided, post final separation, to leave the wife’s home and live with her father. I do not say that the husband made no contribution as a homemaker or parent as I find he did – but the wife’s contributions were superior.
Perhaps in adopting what is thought to be traditional roles at the time, the husband was on all the evidence a good provider, hard worker, entrepreneurial and the “breadwinner” for the family until final separation. Again, I do not say that the wife did not work or create income. I accept she was supportive of her husband; worked casually at times in the businesses he managed and operated, because she did.
In weighing up the myriad of contributions of both a financial and non-financial character, both during the relationship and post separation, I also take into account:
(a)The contribution made by the wife of the two properties in Country GG;
(b)The improvements to the Suburb H property made by the husband. In this regard, I accept his evidence that improvements were made – with the valuer corroborating that the home built in the 1970s looked like it had been “gutted” inside and a new kitchen and refurbishment of all other rooms had been undertaken; as well as external wall treatment. However, not one receipt, invoice, bank record, or other corroboration which might have allowed the Court to assess how much was spent was provided by the husband to the wife, or to the Court. The valuer, understandably, could not speculate on how any improvements may have contributed to the increase in value of the home above market forces;
(c)Post separation, the wife has received limited child support from the husband, who the wife says (and I accept) is in arrears at this time in an amount of approximately $31,501. Apart from the husband’s contribution to the private school fees, the wife (and/or the public purse) have been responsible for meeting the financial needs of the children. I accept the husband desired to spend time with his two younger children and blames the wife for that not happening – despite orders of the Court that do not prescribe the children spending time with him;
(d)The husband has received the benefit of remaining in the Suburb H property. Although he was ordered by Cronin J on 29 November 2011 to pay spouse maintenance of $475 per week, the wife says he only paid a total of $9,854 in over 11 years. By not paying the ordered spouse maintenance payments, the husband retained additional income which contributed to the payment of the home mortgage and quite possibly, the improvements. I return to the issue of arrears of spouse maintenance later in these Reasons;
(e)The wife created through employment post separation, a small superannuation benefit.
Considering all these factors in the context of this long relationship, I find the contribution based entitlements of the parties to be equal at the time of the hearing before me.
SECTION 75(2) FACTORS
Both parties, who are aged 50 years (the wife) and 54 years (the husband), are currently surviving on government benefits – the wife receiving unemployment assistance and family assistance benefits totalling $621 a week; the husband receiving jobseeker of around $300 a week (Financial Statement sworn 8 March 2022), although noting it is not revealed in his Financial Statement filed 19 October 2022.
At their ages they both have potentially 20 years of working life ahead.
However, both parties contend they have limited earning capacity because:
(a)the wife suffers anxiety; and
(b)the husband has a shoulder/arm impediment.
The wife informed the Court that her general practitioner prescribed a mental health plan on mid-2022, although the wife did not produce any evidence from the counsellor/psychologist engaged under the mental health plan as to her condition and prognosis for recovery, or if it prevents her from employment – noting the wife has no formal qualifications and, I accept, post separation, has not engaged in out-of-home employment.
The husband was on notice from the Reasons of Hartnett J of 28 October 2022 (paragraph 15) of the lack of evidence he offered the Court about his health issues. He took no steps to adduce any evidence since then, and further, after her Honour allowed Ms KK to be cross-examined on her affidavit evidence about observing the husband at the MM Venue in Suburb YY in late 2022, her Honour made a finding in these terms, namely:
…that [Ms KK] observed on […] 2022, the husband working and engaging in physical activities at the [MM Venue] in [Suburb YY].
I accept that finding.
As was identified in an old case of Best & Best (1993) FLC 92-418, one of the most valuable resources a party can take from a marriage is the capacity to earn an income. The husband’s work history reveals many years of operating businesses – at times very successfully. I infer that he has many business contacts – not the least being his oldest daughter who lives with him and apparently operates the MM Venue – from which, according to the husband’s Financial Statement sworn 19 October 2022, she generates an average weekly income of $3,000 (or $156,000 per annum). Because the wife was devoted to the role of homemaker and parent during this long relationship, she did not acquire the same level of business skills and contacts that the husband was able to create. I find that the husband’s earning capacity significantly superior to that of the wife, necessitating an adjustment in her favour to the contribution based entitlements.
With only one or two years of schooling left for E, the mother’s responsibilities to the last infant child will not be a long term impediment to the wife’s employability. She could not expect to receive any support from the husband beyond the modest amount for child support currently received by her of $25 per week. I take into account that the other members of the husband’s household, being his daughter C and his domestic partner (who he says has an income of $4,000 per week – $208,000.per annum) contribute to the household in some way. So far as his partner is concerned, the way in which their cohabitation supports the husband is a relevant factor under section 75(2)(m). I take it into account.
I take into account the likely entitlements the parties will receive by way of the s 79 orders I will make, and that a consequence of those orders will be that the wife will retain the Country GG units, although it is unlikely, on her evidence, that she would sell those properties. The husband, if he retains the Suburb H property, will be required to borrow funds from somewhere to pay out the wife, but on his case, will do so to prevent a sale of the home occurring.
The only other relevant factor is the issues that arise for consideration under s 75(2)(o), and I find that:
(a)as already noted, even though there was an agreement as to the value of the properties in Country GG, the wife genuinely holds a view she should not sell or deal with those properties during the lifetime of her father without his consent. After his death, and I infer with knowledge then of how his estate is to be distributed, she would share the value of the two properties with her three siblings;
(b)when the husband was asked what had happened to his superannuation benefits reflected in his Financial Statement filed 20 October 2015 ($45,000), he claimed his then lawyers made a mistake. I do not accept that evidence. The husband has repeatedly, in self-prepared documents, either failed to disclose material facts, or been vague about them. He swore to the accuracy of a Financial Statement in 2015 that had been prepared by his solicitors who are likely to have understood the husband’s obligations to disclose and their duty to the Court. I find, on balance, at around 2015 the husband did have a superannuation benefit of approximately $45,000 and that he has either, over the eight years since then, accessed those funds, or moved them to another fund, not disclosed. I cannot say however if the member benefit increased or reduced, and the lack of any certainty ultimately persuaded me to deal with the issue under s 75(2)(o) rather than as a notional “add back”.
Taking these findings into account, including the disparity in earning capacity, I find an adjustment of 10% to the wife – a differential of 20% on a nett pool of $982,593, or $196,500 is appropriate.
WHAT ORDERS DO JUSTICE AND EQUITY?
If the property pool as found was adjusted and altered so that the wife was to receive 60%, or $589,555, then the husband would have to pay the wife $335,561 to retain the Suburb H property, and take full responsibility for the mortgage.
However, I find that figure should be increased by two further matters:
(a)Spouse maintenance. The husband did not comply with the Order by Cronin J for spouse maintenance made 29 November 2011, seemingly at least preferring to pay house repayments and charges to spouse maintenance and child support. The wife, at paragraph 29, claims outstanding spouse maintenance of $255,671 (to 26 August 2022). It seems that the husband filed an application on 4 October 2017 seeking an order for all arrears of spouse maintenance to be discharged. Curiously, it seems the application was never determined by the Court. In submissions, the wife says she should receive at least four years of arrears of spouse maintenance or $98,800. Doing the best I can, and with a view to achieving some finality for these parties, I will allow an adjustment for non-payment of spouse maintenance for three years – or $74,100; and
(b)In final submissions, the Court expressed some lack of certainty about past orders for costs that had at least been quantified. Mr PP indicated the “Portal” was down and, as such, the best figure he was able to ascertain was $26,397.47 (as set out in his draft minute of order) for a number of costs orders in the wife’s favour. I propose to allow that figure.
As a result, if the husband wishes to retain the Suburb H property he will be required to pay the wife the sum of $436,000, calculated as follows:
Amount calculated above
$335,561
Arrears of spouse maintenance
$74,100
Costs orders against the husband
$26,397
$436,058
which I will round down to $436,000.
The wife will be required to satisfy the obligations owed to her former solicitors so that the caveat they have lodged over the Suburb H property is removed. The husband, as the continuing owner of the property, will need to take steps to have the caveats lodged by C and Ms DD King to be removed where, based on my findings, no caveatable interest by those parties exist.
If the husband cannot pay the required sum to the wife – and he shall have 90 days to do so – then the property will be sold as the orders I propose, in that event, permit. Any enforcement applications or applications to clarify the orders made are to be listed before me.
The husband might say that having a debt of slightly over $900,000 is not maintainable or achievable by him. That figure represents the payment due by the husband, together with the current mortgage balance. His minute of order proposed a payment to the wife of $120,000 payable over four months, which I find would not be just and equitable to the wife.
The husband produced no evidence as to his borrowing capacity – even for the payment of $120,000 he proposed to pay. However, his partner has an income of $200,000 per annum and his daughter an income on $150,000 per annum, and it may be possible for either of those persons to join with the husband in seeking to refinance and pay the wife the sum due, to retain the home they all live in.
Again I say that if the husband is unable to do so, then the property will be sold and after expenses of sale and discharge of the mortgage, the net proceeds will be divided to reflect the Reasons now delivered.
Finally, as to the form of the order, the wife seeks orders that if the Suburb H property is to be sold, then she should control the property sale. Although I can understand the wife might have no confidence that the husband will comply with the order for the property to be sold, I am not prepared to so find, but I am happy for her to be the person who deals with the agents etc. Such an order, as made, will be irrelevant if the husband chooses to pay to the wife the funds I have ordered he pay to her. Of course, if the husband fails to comply, it would be reasonable for him to expect, absent any other evidence, he would bear the consequences financially of his failure to comply.
For these reasons, the orders which appear at the commencement of these Reasons do justice and equity for both parties.
I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 8 February 2023
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