Landon & Landon
[2021] FCCA 1192
•31 May 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Landon & Landon [2021] FCCA 1192
File number(s): WOC 117 of 2019 Judgment of: JUDGE M NEVILLE Date of judgment: 31 May 2021 Catchwords: FAMILY LAW – Final hearing – property – adjustment of parties’ interests in property - husband made greater contributions to purchase of former family home by way of funds advanced by his parents and by inheritance - husband’s income met most of parties’ living expenses through relationship - where wife received compensation payment 3 years post separation for motor vehicle accident that occurred during relationship - where husband has had benefit of funds post separation and whether such funds should be added back - whether husband considered to have made an contribution to wife’s award - where wife has re-partnered adequacy of disclosure about new partner’s financial circumstances and ability of the Court to assess circumstances of cohabitation - where compensation award applied by wife to purchase of residential accommodation - orders made for adjustment in favour of husband of 6%. Legislation: Family Law Act 1975 (Cth) ss 75, 79 Cases cited: Aleksovski & Aleksovski [1996] FamCA 111
Bevan & Bevan [1993] FamCA 95
NHC & RCH [2004] FamCA 633
Gaspaldi & Gaspaldi [2008] FamCAFC 134
Griffiths v Kerkemeyer [1977] HCA 45
Kingston & Field (No 2) [2020] FamCAFC 235
Marker & Marker [1998] FamCA 2382
Norbis & Norbis [1986] HCA 17
AJO & GRO [2005] FamCA 195
Stanford v Stanford (2012) 247 CLR 108
Trevi & Trevi [2018] FamCAFC 173
Number of paragraphs: 361 Date of hearing: 21, 22 and 23 October 2020 Place: Sydney Solicitor for the Applicant: Rossi Simicic Lawyers Solicitor for the Respondent: Heard McEwan Lawyers Counsel for the Applicant: Mr Dura Counsel for the Respondent: Ms Eldershaw ORDERS
WOC 117 of 2019 BETWEEN: MS LANDON
Applicant
AND: MR LANDON
Respondent
ORDER MADE BY:
JUDGE M NEVILLE
DATE OF ORDER:
27 NOVEMBER 2020
THE COURT ORDERS THAT:
1.In these Orders, the following definitions apply:
(a)"B Street, Suburb C Property" means the property situate at B Street, Suburb C in the State of New South Wales being the whole of the land contained within Folio Identifier ....
(b)“ANZ Joint Facility” means the overdraft facility in the names of Ms Landon and Mr Landon trading as Company D, Account Number ...65.
(c)“ATO Debt” means the Wife’s personal indebtedness to the Australian Taxation Office including all General Interest Charges, penalties, administration fees or other costs imposed by the Australian Taxation Office recoverable by that agency in relation to the wife’s Client Account (TFN ...; ABN ...) from time to time.
(d)“E Street, Suburb F Property” means the property at E Street, Suburb F in the State of New South Wales being the whole of the land contained in Folio Identifier....
(e)“Insurance Payment” means the money paid to the Wife by G Insurance pursuant to a General Assessment by the State Insurance Regulatory Authority in the matter of Landon v G Insurance dated 22 January 2020.
General provisions
2.Except as provided by any order to the contrary in these Orders, the Wife shall retain all her right, title and interest in:
(a)The B Street, Suburb C Property;
(b)The Insurance Payment (to the extent it may not be incorporated into the value of the B Street, Suburb C Property);
(c)All monies held in any bank account standing in her name or held for her benefit;
(d)All superannuation interests standing in her name or to her benefit;
(e)Her H Motorcycle (NSW Registration ...);
(f)Her Motor Vehicle 1 (NSW Registration ...); and
(g)All furniture, household furnishings, or other chattels currently in her possession or control.
3.Except as provided by any order to the contrary in these Orders, the Husband shall retain all right, title and interest in and to the following property:
(a)The E Street, Suburb F Property;
(b)All monies held in any bank account standing in his own name or held for his benefit;
(c)All superannuation interests standing in his name or to his benefit;
(d)His Motor Vehicle 2;
(e)All furniture, household furnishings, or other chattels currently in his possession or control.
ANZ Joint Facility
4.Within 28 days of these Orders, the Husband shall do all acts and things to discharge the Joint ANZ Facility.
5.Within 7 days of receiving a request in writing from the Husband, the Wife shall do all acts and things and sign all documents and give all authorities to the ANZ as required to close the ANZ Joint Facility.
Releases and Enforcement
6.Except as otherwise provided in these orders, each party shall be solely liable for any personal loan, credit card liability or other debt, including any taxation liability (and the Wife’s ATO Debt), which is standing in their name or to their account and shall indemnify and keep indemnified the other party for such liability.
7.From the date of these orders, the each party shall indemnify and keep the other indemnified against all or any manner of action or demand whatsoever both at law and in equity which that party may now have or at any time in the future may have, howsoever arising and for abundant clarity:
(a)the Wife shall wholly indemnify the husband against any action or demand relating to the ATO Debt; and
(b)each party may rely on this Order as a defence to any such claim or demand whether such demand or claim is the subject of judicial, quasi-judicial or administrative action or proceedings including in relation to the indemnification of that party’s costs in such a matter.
8.The parties shall each do all acts and things and sign all documents, give all approvals and authorities as necessary to give effect to these Orders.
9.In the event that either party fails to execute any document necessary to give effect to these orders, the Registrar of the Federal Circuit Court of Australia at Wollongong be appointed pursuant to s 106A of the Family Law Act to execute the document on behalf of the party who refuses or neglects to execute it and do all acts and things necessary to give force and effect to these orders AND FURTHER the party refusing or neglecting to execute the document or documents pay the costs of the other party on a solicitor-client basis in relation to obtaining the Registrar’s signature.
10.Any costs application to be made within 28 days of today’s date.
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 under the pseudonym Landon & Landon is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE M NEVILLE:
Ms Landon (“the wife”) and Mr Landon (“the husband”) are in dispute about the adjustment of their interests in property following the breakdown of their marriage.
The matter was listed for final hearing on 21, 22 and 23 October 2020.
BACKGROUND
The parties commenced their relationship in 2006 and started to live together in the latter part of that year.
Whilst there are no children of the relationship between the parties, each have children from previous relationships.
The wife has three children from a previous relationship – X, Y and Z. At the time the parties started to live together X was aged 11, Y was nine and Z was seven years of age. There is a dispute between the parties as to whether the children spent time with their father on alternate weekends, or whether they lived with the parties, and with their father on an equal time basis.
The husband has two children from a previous relationship – J and K. J was aged four years and K was aged two years at the time the parties started to live together. At the time the parties started to live together, the husband’s children were in his former partner’s primary care in Town L, NSW. Initially, they would spend time in the parties’ household on a fortnightly weekend basis. Later in the relationship, J and K entered the husband’s primary care and lived with the parties. The parties disagree as to when this occurred.
In 2006 or 2007, the parties established a business called “Company D”. The business operated from leased premises in the Suburb M Shopping Centre. In order to open the business, the parties made a joint application for finance with the ANZ Bank.
Initially, the parties lived together in a property rented in the wife’s name at E Street, Suburb F, NSW. The wife was working in the business attending to clients and otherwise managing the business and the husband was working as a health care worker.
In 2007, the parties purchased property at E Street, Suburb F (“the E Street, Suburb F property”) for $465,000. The property was registered in the husband’s sole name and was financed by a loan from the ANZ Bank of $371,000. The husband’s parents advanced $106,000 which was applied to the purchase and to the stamp duty costs.
Later that year, the husband received an inheritance of $169,000. Of that inheritance, $100,000 was applied to the mortgage over the property.
In 2008, the shop next door to the business became available and a second business called “Company N” was established. The wife then commenced to work in both businesses.
The parties were married in 2014.
In 2014, the wife was involved in a serious motorbike accident and sustained numerous physical injuries. She was unable to work for about 15 months and required significant assistance from her family whilst she recovered. She endeavoured to keep the business afloat, but it was closed in 2017. A bank guarantee was called in for unpaid rent on the premises and there are outstanding debts associated with the business.
The wife made a motor vehicle compensation claim following the accident and in 2020, she received the net sum of $669,484 from that claim.
The parties do not agree as to the date of their separation. The wife contends that the parties separated in 2015 but continued to live under the same roof until 2017. The husband contends the parties separated in 2017. It was not controversial, however, that the parties lived together until 2017 and continued to use jointly held assets and liability until that time.
In 2018, the wife commenced a relationship with Mr O (“Mr O”) and they started to live together in rental accommodation.
On 8 February 2019, the wife commenced these proceedings, filing an Initiating Application.
The husband’s Response was filed on 15 March 2019.
The parties were divorced on 15 April 2019.
In 2020, the wife and Mr O purchased property at B Street, Suburb C as joint tenants. The wife applied almost the entirety of her compensation payment to the purchase of that property.
The matter was listed for final hearing commencing 21 October 2020.
THE COMPETING APPLICATIONS
The wife seeks an adjustment of the parties’ property interests that would see her retain about 70% of the property pool as valued by her. The practical effect of the orders sought by her is as follows:
(a)The husband would transfer to the wife the sum of $365,000 by way of cash adjustment.
(b)He would receive, or otherwise retain:
(i)The E Street, Suburb F property, valued at $850,000;
(ii)His vehicle, valued at $65,000;
(iii)Two dirt bikes; and
(iv)Cash at bank.
(c)He would be required to discharge the ANZ overdraft facility standing in joint names being a liability of $54,000 and otherwise retain the liability of the E Street, Suburb F mortgage (agreed between the parties to be $257,626).
(d)In the event that the husband failed to make the cash adjustment and, or, discharge the overdraft facility, the E Street, Suburb F property would be sold. After sales costs were met and after the mortgage and overdraft facility was discharged, she would receive 68% and the husband would receive 32% of the net proceeds of sale.
(e)A superannuation splitting order would be made in favour of the wife with a base amount of $126,000.
(f)The wife would receive or otherwise retain:
(i)Her interest in the B Street, Suburb C property valued at $668,000 (unencumbered);
(ii)Her motorcycle valued at $22,000;
(iii)Her interest in Motor Vehicle 1 valued at $16,000;
(iv)Cash at bank;
(v)The sum of $365,000 by way of cash adjustment; and
(vi)A superannuation splitting order in her favour in the amount of $126,000.
(g)She would be responsible for the taxation liability of $103,656.
The orders proposed by the husband would see him retain about 56% of the property pool with the following practical effect:
(a)The husband would receive or otherwise retain the benefit of:
(i)The E Street, Suburb F property valued at $850,000;
(ii)His Motor Vehicle 2 valued at $65,000;
(iii)Cash at bank;
(iv)Superannuation of $325,414.
(b)He would discharge the overdraft ($54,000) and otherwise assume the liability for the mortgage ($257,626).
(c)The wife would receive or otherwise retain the benefit of:
(i)Her interest the B Street, Suburb C property valued at $668,000;
(ii)Her car interest in the Motor Vehicle 1 valued at $16,000
(iii)The H Motorcycle valued at $22,000; and
(iv)Her superannuation valued at $711,990.
(d)The wife would assume the liability for her taxation debt of $103,656.
MATERIAL RELIED UPON
Counsel for each party had prepared a case outline document which was of great assistance in understanding the parties’ competing applications, their respective arguments and the chronology of the matter.
The wife relied on:
(a)Initiating Application filed on 8 February 2019;
(b)Her Affidavit filed on 9 October 2020;
(c)Tender bundle;
(d)Financial Statement filed on 14 October 2020;
(e)Affidavit of Mr P filed on 9 October 2020; and
(f)Affidavit of Ms Q filed on 9 October 2021.
The husband relied on:
(a)Response filed 15 March 2019;
(b)His Affidavit filed 9 October 2020;
(c)Financial Statement filed 9 October 2020;
(d)Affidavit of Mr R filed on 9 October 2020; and
(e)Affidavit of Ms S filed on 9 October 2020.
In addition to those documents, the following documents were tendered:
Exhibit A: Wife’s proposed minute of order
Exhibit B: Husband’s proposed minute of order
Exhibit C: Working Balance Sheet (lines 12, 22, 23 and 24 omitted)
Exhibit D: Husband’s Financial Statement filed 15 March 2019
Exhibit E: Wife’s tender bundle
Exhibit F:Bank T statement for account ending ...77 for period 9 April 2020 to 8 October 2020
Exhibit G: Ms Landon account statements
Exhibit H: Final balance sheet upon which submissions are madeTHE LAW
The approach to the determination of an application for property settlement orders is set out in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”), which was considered in detail by the Full Court in Bevan & Bevan [1993] FamCA 95 (“Bevan”).
The starting point is a 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”.
This involves identifying the existing interests and then considering whether having regard to the particular circumstances of the case, it would be just and equitable to make orders for the alteration of property interests.
The Court then turns to a consideration of the matters set out in s 79(4)(a) to (c) of the Family Law Act 1975 (Cth) (“the Act”), that is the financial and non-financial contribution made by the parties to the acquisition conservation and, or, improvement of the property of the marriage and to the welfare of the family.
The Court then considers the remainder of the matters in s 79(4) including the matters referred to in s 75(2) so far as they are relevant, to determine whether there should be a further adjustment to the parties’ contribution-based entitlements.
Finally, the Court is to consider the justice and equity of the proposed orders. As was said in Bevan at [86], the just and equitable requirement is “not a threshold issue, but rather one permeating the entire process”.
THE WITNESSES
Before proceeding to consider the matters arising in this application, it is useful to consider the witnesses in the proceedings.
The Court heard from each of the parties as well as from the husband’s mother, Ms S (“Ms S”).
The wife contended that the Court would prefer her evidence to that of the husband and Ms S. It was submitted that there were glaring omissions in the husband’s Financial Statement and that his credit was impeached on a number of counts including, for example, in relation to an application for divorce prepared by him reflecting a date of separation in 2015 contrary to his present contention; and the contents of an application for finance made by him (which will be discussed later in these reasons). It was further submitted for the wife that the evidence of Ms S was self-serving and exaggerated the assistance she provided to the parties.
It was submitted for the husband that the Court does not need to make credit findings in this case. Submissions were made to the effect that where there is a “bombardment” of documentary evidence, the Court may make reference to that material to make sense of what happened between these parties.
I accept the submissions made for the husband that credit findings are unnecessary in this case. I consider that each party had issues with their ability to make reasonable concessions. Each struggled with their ability to recall certain matters whilst they were giving their evidence. For the most part, I formed the impression that this was as a consequence of each of them not having paid close attention to the particulars of their finances throughout the relationship rather than any deliberate attempt to mislead or obfuscate.
Ms S impressed as a witness who gave truthful evidence to the best of her ability.
PRELIMINARY ISSUE: DATE OF SEPARATION
Date of separation
There is some dispute as to when it is that the parties commenced to live separately under one roof. The wife contended that separation occurred in or around 2015. The husband contended it occurred on 2017.
Whilst each party had adduced evidence on the issue in their trial affidavits, and whilst there was cross-examination on the issue during the course of the trial, ultimately, both parties accepted that the distinction was an unimportant one in the ultimate determination of this matter and each agrees that physical separation occurred on 27 June 2017.
IDENTIFYING THE PROPERTY POOL
The parties had worked hard to prepare a joint balance sheet in advance of the hearing. As is often the case in property proceedings, the parties updated the balance sheet throughout the course of the proceedings. Just prior to the commencement of submissions, the following concessions and, or, adjustments to the parties’ contentions were made:
(a)The wife conceded that the balance of the husband’s Bank U account ending ...31 was $5 and that the balance of the Bank U account ending ...94 was $6,662.
(b)The wife adjusted her contention as to the value of the household contents in the possession of the husband from $15,000 to $80,000. The husband continued to contend that the value is negligible.
(c)The husband adjusted his contention as to the value of the wife’s interest in the B Street, Suburb C property from $660,000 to $668,000. The wife continued to contend that her interest was valued at $407,500.
(d)The husband conceded the value of the wife’s interest in the Motor Vehicle 1 is $16,000.
(e)The husband conceded that, in the absence of evidence about it, the Virgin Credit Card liability should not be included on the balance sheet.
Accordingly, the balance sheet upon which submissions were made is as follows:
Ownership Description Wife’s value Husband’s value ASSETS 1 H E Street, Suburb F 850,000 850,000 2 W 50% share of B Street, Suburb C 407,500 668,000 3 H Motor Vehicle 2 65,000 65,000 4 W Motor Vehicle 1 (wife’s share) 16,000 16,000 5 H Motorbikes x 2
W Motorcycle & Dirt BikeNK 6 W H Motorcycle 22,000 22,000 7 W Bank T account #...77 4,135 4,135 8 H Bank U Account #...31 5 5 9 H Bank U Account #...94 6,662 6,662 10 J Contents of former family home in possession of husband 80,000 Nominal Total Assets $1,451,302 $1,631,802 SUPERANNUATION
Member
Name of Fund
Type of Interest
Applicants value
Respondents value
11 W Super Fund AA: Accumulation 2,055 2,055 12 W Super Fund BB: Accumulation 6,065 6,065 13 H Super Fund CC: Accumulation 325,414 325,414 25 W Super Fund DD: Accumulation 63,870 63,870 Total superannuation $397,404 $397,404 LIABILITIES 17 W Taxation liabilities, business 103,656 103,656 18 J ANZ overdraft account 54,000 54,000 19 H Bank U mortgage secured over E Street, Suburb F property 257,626 257,626 20 H Motor Vehicle 2 finance NK 68,790 21 H Virgin Credit Card - - Total Liabilities $415,282 $484,072 ADDBACKS 22 H Sale proceeds of Motor Vehicle 3 24,000 - 23 H ANZ Refinance - - 24 H ANZ Drawdowns not accounted for. - - 25 H Bank U refinance surplus funds unaccounted for by husband 59,974 - 26 H Proceeds received from the sale of Shares EE in Oct 2018 12,511 - 27 H Legal fees paid NK - 28 H Monies paid by husband to his parents on separation 29,233 Total Addbacks $125,718 Nil TOTAL NET ASSETS EXCLUDING SUPERANNUATION (Assets + Addbacks – liabilities) Total 1,161,148 1,147,730 TOTAL NET ASSETS INCLUDING SUPERANNUATION
(Assets + Addbacks – liabilities + superannuation)Total 1,558,552 1,545,134
By the time of closing submissions, and by reference to the final agreed balance sheet the parties were in dispute about the following items:
(a)Item 2: Value of the wife’s interest in the property at B Street, Suburb C.
(b)Item 10: the value of the contents and furniture from the former family home.
(c)Items 22 - 27: what, if anything, should be added back against the husband.
Turning then to the contentious items.
Assets in dispute
The value of the wife’s interest in B Street, Suburb C
In 2020, the wife and her partner Mr O purchased property together at B Street, Suburb C. The property was registered in both names, as joint tenants and the wife and Mr O reside together in the property with the wife’s children Y and Z.
The wife contends that she has a 50% share in the property, valued at $407,500.
The husband contends that the wife’s interest in the property should be valued at $668,000 being her financial contribution to the purchase price.
The property was purchased for $815,000. In her affidavit, the wife deposed that she applied $660,000 of her compensation award to the purchase. The balance of the purchase price and stamp duty costs were paid by Mr O. There is no evidence as to whether Mr O financed those costs outright, or whether he obtained finance in relation to them. The wife does not disclose that she has any liability under a mortgage over that property in her affidavit evidence nor in her Financial Statement. There is no evidence that the property is encumbered in any way. Having regard to these matters, I have assumed that Mr O met the balance of the purchase price and stamp duty costs outright without borrowing.
By reference to the wife’s Bank T statement for account ending ...77, the sum of $660,000 was transferred to an account named “Ms Landon and Mr O” on 15 April 2020. I infer that this transaction represented the wife’s contribution of $660,000 toward the purchase price.
On 9 May 2020, the sum of $8,000 was transferred from that account with a transaction reference “Ms Landon n Mr O Home Loan”. I infer that this represents a further $8,000 paid by the wife toward the purchase price of the B Street, Suburb C property.
I therefore conclude that the wife contributed $668,000 to the cost of the B Street, Suburb C property.
During cross-examination, the wife gave evidence that she and Mr O equally share the outgoings on the B Street, Suburb C property. In her Financial Statement, she disclosed that the annual council rates are $1,557 of which she pays $778. On this basis, she contends that her interest is 50% of the value of the property.
The husband contends that the wife’s equitable interest in the property is $668,000 that being the amount she contributed to the purchase price of the property.
Whilst it may be the case that the wife and Mr O contribute equally to the outgoings on the property, it is clear that the wife has contributed over 80% to the purchase price of the B Street, Suburb C property and that her equitable interest in the property would be well over 50% of the value of the property.
Given that the Court’s task is to ascertain the legal and equitable interests of the parties, I consider that the balance sheet should reflect the value of the wife’s equitable interest in the property of $668,000.
W motorbikes
The wife contends that two W motor bikes should be included in the parties’ assets.
The husband does not dispute that he has two dirt bikes in his possessions. He gave evidence that he purchased them for $12,000 in 2020 and that they are subject to finance. One is used by the husband, the other is used by his son. The bikes apparently cannot be registered for use on New South Wales roads.
The husband conceded that he had not disclosed them in his Financial Statement or affidavit. When asked why, he said that he considered that the dirt bikes were a negative asset, because they were subject to 100% finance. As I understand his evidence, he considers that any value in the dirt bikes is either equivalent to or less than the finance owing on them. There was no evidence such as a Red Book valuation to assist in determining whether the dirt bikes have retained their value of $12,000 or whether their value has increased or diminished over time.
Whilst the husband gave evidence that he had been making repayments on the bikes, there is no evidence as to the current amount of finance owing on them, and it is difficult to reconcile his evidence that he has been making repayments with his evidence that there is “100% finance owing” on them. I am unaware as to whether he has been making interest only repayments on the finance for the dirt bikes or whether his repayments have also reduced the capital sum borrowed by him.
The wife did not suggest that the dirt bikes were not subject to finance. That being so, inclusion of the dirt bikes in the list of assets would necessitate a corresponding liability for the finance owing on them.
There is no evidentiary basis to reach any safe conclusion as to the value of the dirt bikes nor any associated liability for them. Given that they appear to represent a very modest percentage of the overall property pool, I consider that the dirt bikes – and any finance owing on them – should be included in the assets and liabilities with an unknown value and should be considered further when the s 75(2) factors are addressed.
The value of the household contents
The parties are in dispute as to the value of the household contents presently in the possession of the husband.
The wife contends that the contents are presently valued at $80,000. The husband contends the home contents are of negligible value.
In support of her contention, the wife relies upon the contents of an application for finance completed by the husband in or around August 2020, at the time that he purchased the Motor Vehicle 2. In that document, the value of “other assets” is listed as $80,000.
During cross-examination, the husband was asked about the manner in which the document was completed. As I understood his evidence, he provided information to a loan officer or customer service officer to input into the application form. He agreed that he was the person who had provided the information that went into the document and that he had been truthful when providing that information. He did not recall seeing the form before the application was submitted.
In the section of the application that deals with the husband’s financial position, it lists that he has “other assets” with an estimated value of $80,000. Under cross-examination, he gave evidence that he imagined that this would have been a reference to “home and contents” and could not think of anything else to which it would relate.
To the extent that the husband provided information about his financial position in the completion of that application, he had little recall about it. He was unable to recall whether or not he was asked for the balance of his superannuation account, nor whether he reviewed the form after it was completed. It was not suggested, nor did I form the impression that he was untruthful or evasive in this regard. Rather, it appeared he had little recall of the event.
In submissions, counsel for the wife pointed out that the husband did not give evidence under cross-examination that the figure of $80,000 was recorded incorrectly in the application for finance. I observe that whilst this is accurate, the husband appeared to struggle to recall with detail, the form being filled in, and the information in the form clearly sits at odds with the husband’s two Financial Statement s filed in these proceedings that the value of his home contents are negligible.
It was submitted for the wife that the information about “other assets” contained within the application for finance, together with the lack of evidence given by the husband that it was incorrectly recorded support a finding that the value of the husband’s household contents is, in fact, $80,000.
That submission, however, requires the Court to accept at face value one piece of information in an unsigned application document completed by another person on behalf of the husband. Were it the only piece of information contained within the application, it may be possible to accept it at face value, however, it is not. That information sits within the context of other information contained within the form.
Looked at in its totality, the document inaccurately records the husband’s financial position to a significant extent. Insofar as it records the husband’s assets it states that the husband had no money or savings in the bank, but it appears from other evidence that at or around that time he had savings in the vicinity of $2,000. It discloses a value of $0 for the husband’s motor vehicle when it appears that the husband had a motor vehicle with a trade in value of $40,000, albeit with finance owing on it. It records that the husband had superannuation valued at $0, when this is clearly inaccurate and he had superannuation in the vicinity of $325,000.
Further inaccuracies appear in relation to the information about the husband’s liabilities. It records the husband as having a home loan of $350,000 with $2,600 outstanding and a monthly repayment of $1,300. This is inaccurate on a number of fronts. The mortgage first obtained for the purchase of the E Street, Suburb F property was $371,000. It was not, and has never been $350,000. To the extent that the property is encumbered under the re-finance through Bank U, the mortgage at the time of the refinance was approximately $215,000. It is clear that the balance outstanding on the home loan is in excess of $2,600.
Again, inaccuracies appear in the section dealing with the husband’s expenditure. Whilst the form records monthly living expenses of $2,000 (specified to relate to electricity and food) it records no expenditure whatsoever on insurance payments, telephone and internet, holidays and sports, entertainment, alcohol, tobacco or gambling. Clearly, this is inaccurate. For example, by reference to the husband’s Financial Statement, it would appear he has insurance costs of $95 per week, or about $400 per month which is not reflected in the application for finance.
There are a number of significant problems with the accuracy of the information in the finance application document.
Compounding the problem, is that the document does not disclose, on its face, who it was that completed it. There is no signature on the document.
Counsel for the husband submitted that when faced with a form that is replete with inaccuracies, it is not correct to cherry pick some, but not all, of the information contained therein as being accurate. I accept that submission. When looked at in its totality, the inaccuracies in the document make it fundamentally unreliable. These inaccuracies may arise because the husband provided wrong information, or because the information provided by him was inaccurately recorded, or perhaps a combination of the two.
Given that there are inaccuracies as to both assets and liabilities, and given that there are inaccuracies as to monthly expenditure it does not appear likely that the husband has deliberately provided inaccurate information so as to improve the prospects of his application.
Where the husband contends, and has always contended in these proceedings, that the value of his home contents is negligible, the extent of the inaccuracies contained within the application for finance document when contrasted with all of the available evidence on this application leads to a conclusion that the document is not reliable and that it cannot safely support a finding that the husband’s household contents are indeed valued at $80,000.
Beyond reference to the application for finance, the wife gives no evidence as to any items owned by the husband that cause her to consider he has contents to the value of $80,000.
Whilst it was suggested to the husband during cross-examination that when the wife left the former family home, she left with nothing, he did not accept that suggestion. He gave evidence that the wife took a brand new 75 inch television, a mountain bike valued at $8,500 and other small items. In his affidavit, he deposed that the wife had taken a ring which was a family heirloom, together with earrings and a pendant belonging to his daughter.
Insofar as the wife had any information about the contents within the former family home that she left behind, she gave no evidence of any items of significant value that would support a conclusion that the husband has contents valued at $80,000.
There is no evidence that either party contemplated or sought to obtain valuation evidence in relation to the household contents to support a conclusion that they are worth $80,000.
Having regard to the above matters, on balance, I am not satisfied that the value of the contents in the husband’s home is $80,000.
The wife does not include in the balance sheet the value of the contents of the home she shares with Mr O. In her Financial Statement filed 14 October 2020, she described the value as “Neg” which I infer means negligible. Where the husband has contended in his Financial Statement s that the value of his household contents is negligible and where the wife adduces no evidence to establish that the value of the husband’s household contents other than the application for finance, I consider that the husband’s household contents should be given negligible value on the balance sheet.
Addbacks in dispute
Before turning to the competing contentions in the present case, it is necessary to consider the principles relevant to determining whether notional property should be “added back” to the property pool.
It is well established that the notional adding back of property is a matter falling within the discretion of the Court. As was observed in AJO & GRO [2005] FamCA 195 (“AJO & GRO”) (at [31]) and subsequent authorities (see, for example, 2004] FamCA 633 (“NHC & RCH”)), the notional adding back of property to the contested pool is a matter falling within the discretion of the Court, and is the exception, rather than the rule.
As was observed in Trevi & Trevi [2018] FamCAFC 173 (“Trevi”) and in NHC & RCH, the Full Court said in Marker & Marker [1998] FamCA 2382 that the Family Law Act 1975 (Cth) does not require a person to “go into a state of suspended economic animation” after the breakdown of their relationship and prior to any property settlement. It is not the case that the assets of the relationship are, in effect, frozen pending determination of any property settlement. Parties are entitled to continue to provide for their own support and any issue as to whether the expenditure is reasonable or extravagant may be determined by the Court.
In Trevi (at [30]) the Full Court identified two fundamental principles emerging from AJO & GRO observing as follows:
“First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor.”
In AJO & GRO, the Full Court considered that there are three clear instances where it is appropriate to notionally add back property to the contested pool:
(a)Legal Fees;
(b)Premature distribution of matrimonial assets; and
(c)Wastage.
In NHC & RCH, the Full Court distinguished between funds applied post separation that were in existence at the time of separation in which both parties might be seen to have an interest, and funds applied from those generated from a party’s post-separation endeavours, undertaken in the party’s own right.
In Trevi, the Full Court emphasised that whilst the line of authority in relation to the adding back of notional property provides a guideline to the exercise of the Court’s discretion, legitimate guidelines do not replace discretion. The Full Court observed the comments of the High Court of Australia in Norbis & Norbis [1986] HCA 17 that “guidelines must [preserve] so far as it is possible to do so, the capacity…to do justice according to the needs of the individual case”.
Turning then to contentious addbacks.
Sale proceeds of Motor Vehicle 3
It was not controversial that prior to separation, the husband purchased a Motor Vehicle 3 for about $37,000. During cross-examination, the husband gave evidence that the vehicle was purchased new, in or around February or March 2016 under finance obtained in his sole name.
In 2018, after separation, he sold the vehicle for $24,000. There was no finance owing on it at the time of sale. The sale proceeds were deposited into his bank account and he agreed during cross-examination that he applied the proceeds of sale however he saw fit. This included the purchase of a motorbike in 2018.
The husband agreed that he had not included the motorbike as an asset owned by him in his Financial Statement filed on 15 March 2019 because he sold it within about 10 months of its purchase for $10,500, although he later conceded by reference to his bank statements that it was in fact sold about 4 months later.
He agreed that he did not disclose the sale of the Motor Vehicle 3 and the subsequent purchase of the motorbike and the sale of the motorbike in his Financial Statement s or his affidavit, as he did not consider them to be relevant.
The wife seeks that the sum of $24,000 be added back against the husband, being the sale proceeds of the Motor Vehicle 3. The husband resists the addback.
Whilst the husband has had the benefit of the proceeds of the sale of the Motor Vehicle 3 they represent approximately 1% of the net property pool. They have gone on to be applied by the husband to other assets, and I consider that rather than adding them back, they are better considered under the s 75(2) factors.
Bank U refinance surplus funds in 2017
Insofar as the husband refinanced debt in 2017 shortly after separation, it was not controversial that in addition to refinancing the mortgage over the E Street, Suburb F property, the husband refinanced credit card debt – the existence of which was unknown to the wife – he also refinanced motor vehicle debt and he otherwise obtained further finance to meet his living costs. The wife seeks that the additional finance obtained by the husband and not applied to the mortgage in the amount of $59,974 be added back against the husband. The husband resists the addback.
Following separation, the husband – without notice to or consultation with the wife – obtained finance of $275,000 secured against the E Street, Suburb F property with the Bank U.
The wife contended that at the time, the amount of $215,026 was owing on the mortgage and the addback she seeks represents the finance obtained in excess of that amount.
The husband contends that the sum of $215,346 was applied to the discharge of the (then) existing mortgage over the E Street, Suburb F property.
Having regard to the settlement report letter from FF Law Firm, the solicitors for the Bank U dated 21 July 2017 annexed to the husband’s affidavit, I am satisfied that the sum of $215,346 was applied to the discharge of the ANZ Mortgage over the E Street, Suburb F property.
That settlement report is consistent with the husband’s affidavit evidence that the funds of $59,654 was applied by him as follows:
(a)Bank fees and charges: $969;
(b)Payment to a Westpac credit card ending ...21: $9,700;
(c)Payment to a Bank GG credit card ending ...74: $12,248;
(d)Payout finance on the husband’s car and general living expenses: $32,813.
(e)Payment to Bank HH for the wife’s car: $3,921.
The wife sought disclosure from the husband about the refinancing. In the husband’s reply, sent 30 September 2020, he enclosed a copy of the formal approval letter from Bank U setting out the manner in which the funds were to be applied.
It appears that the funds obtained under refinance fall into 3 categories:
(a)Refinance of the mortgage over the former matrimonial home;
(b)Consolidation of credit card debt and motor vehicle finance; and
(c)Funds for the husband’s general living expenses.
During cross-examination, the husband gave evidence that his rationale for refinancing the credit card debt and the motor vehicle finance was to obtain a lower rate of interest in respect of those debts.
Insofar as the refinance was applied to the consolidation of credit card debt, the wife deposed that she had no knowledge of the two credit cards to which funds were applied.
There is little evidence about the two credit cards held by the husband with Westpac Bank or with Bank GG. The husband makes no reference to them in his affidavit, other than to say that the balances were discharged by the refinance obtained in July 2017.
It was not controversial that the wife did not use either of those credit cards. There is no evidence as to how the credit obtained under each of those cards was applied by the husband.
Given that the refinance occurred in July 2017, within about one month after separation, I consider that it is possible that to the extent credit card debt was outstanding at that time, it was debt incurred prior to the parties’ physical separation.
The husband submitted that where the vast majority of the parties’ living expenses were being met by the husband as the wife was unable to work, to the extent there was credit card debt, it was likely applied by the husband to meet the household costs and, or, costs for the benefit of the family at a time when he was the primary income earner.
The difficulty with that proposition is that there is no evidence in support of it and it is evidence that would have been available to him to adduce. It appears from the solicitors’ correspondence in evidence that disclosure about this matter was in issue before the hearing, but there is no evidence adduced by the husband to demonstrate the use he made of the credit cards. The debt under the credit cards was not insignificant.
To the extent that the refinance funds were applied to consolidate motor vehicle debt, it is clear that it was in relation to finance owing on both the husband’s and the wife’s motor vehicles, acquired prior to the parties’ separation.
The husband gave evidence that the sum of $24,000 was applied to discharge finance on his Motor Vehicle 3.
To the extent that the refinance funds were applied to the husband’s living costs, I am unable to discern, from the entirety of the evidence, the amount of funds so applied.
Given that the refinance funds were applied against debts some of which were apparently incurred prior to separation and, as best I can work out, applied for the benefit of the family I do not consider that they should be added back against the husband.
Further, given that funds were applied by the husband to meet his living expenses, and noting that the authorities inform that a party is not required to go into a state of suspended economic animation post separation and prior to property issues being determined, I consider that this matter is better considered at the s 75(2) factors and that the funds should not be added back against the husband.
Proceeds from sale of EE shares – October 2018
It was not controversial that throughout the relationship and at the time of separation, the husband held shares in EE. During cross-examination, he gave evidence that he had received those shares by way of inheritance from his grandfather, although he was unable to recall the year his grandfather died.
It was also not controversial that those shares were sold in or around October 2018 and that the husband received $12,000 upon the sale.
During cross-examination, the husband agreed that he had retained the $12,000 and had used it as he saw fit.
It would appear that to the extent that the husband held EE shares during the relationship, he acquired them through an inheritance he received. They were not acquired by way of a joint purchase by the parties nor were matrimonial funds applied to acquire the shares.
Where – on each party’s estimate – the net value of the property pool exceeds $1,500,000 the shares represent less than 1% of the pool and I consider that it is not appropriate to add the value of those shares back as against the husband, but, rather, to consider them under the s 75(2) factors.
Monies paid by the husband to his parents on separation
The wife seeks that the sum of $29,233 be added back against the husband being monies that the husband paid to his parents post separation. The husband resists the add back of those funds against him.
The basis for the wife’s contention as to the quantum of monies paid to the husband’s parents appears at paragraph 105 of her trial affidavit. During cross-examination, the husband gave evidence that he had not cross-referenced the transactions listed in the wife’s affidavit against his bank records. He accepted that he had transferred just under $30,000 to his parents.
The transactions referred to in the wife’s affidavit all post-date separation. But for two transfers of $5,000 on 6 November 2017 and 9 May 2018, each individual transaction is for a relatively modest amount.
Where the husband was employed and earning income, it is impossible to ascertain the extent to which any of the funds transferred to his parents came from his income as opposed to a source of funds that could be considered to be matrimonial property. For these reasons, I do not consider that this sum should be added back as against the husband and that it is better considered under the s 75(2) factors.
Liabilities
The amount of finance outstanding on the husband’s Motor Vehicle 2
In August 2020 the husband purchased a Motor Vehicle 2 vehicle. He purchased the vehicle under finance and contends that he has a liability of $68,790.
The wife contends that the value of the liability is unknown in circumstances where the value contended for by the husband is for finance over a 4 year period and where the husband did not either before trial or during trial, obtain a payout figure from the finance company.
It was submitted for the wife, and I accept, that if the loan was paid out at the time of hearing, that the liability would likely be less than $68,790. There is no evidence, however, to establish how much less it would be.
The available evidence can only lead to a finding that the liability is, at present, $68,790.
The property pool: findings and conclusions
Having regard to the above findings in relation to the contentious items on the joint balance sheet, I find the property pool available for division between the parties is as follows:
Ownership
Description
Value
ASSETS 1 H E Street, Suburb F 850,000 2 W Interest in B Street, Suburb C 668,000 3 H Motor Vehicle 2 65,000 4 W Interest in Motor Vehicle 1 16,000 5 H W Motorbikes x & Dirt Bike NK 6 W H Motorcycle 22,000 7 W Bank T account #...77 4,135 8 H Bank U Account #...31 5 9 H Bank U Account #...94 6,662 10 J Contents of former family home in possession of husband Nominal Total Assets $1,631,802 SUPERANNUATION Member
Name of Fund
Type of Interest
Value
W Super Fund AA: Accumulation 2,055 W Super Fund BB: Accumulation 6,065 H Super Fund CC: Accumulation 325,414 W Super Fund DD: Accumulation 63,870 Total superannuation $397,404 LIABILITIES W Taxation liabilities, business 103,656 J ANZ overdraft account 54,000 H Bank U mortgage secured over E Street, Suburb F property 257,626 H Motor Vehicle 2 finance 68,790 H Virgin Credit Card - H Finance on W motorbikes NK Total Liabilities $484,072 ADDBACKS
H Sale proceeds of Motor Vehicle 3 - H ANZ Refinance - H ANZ Drawdowns not accounted for. - H Bank U refinance surplus funds unaccounted for by husband - H Proceeds received from the sale of EE shares in Oct 2018 - H Legal fees paid - H Monies paid by husband to his parents on separation - $0 TOTAL NET ASSETS EXCLUDING SUPERANNUATION (Assets + Addbacks - liabilities) Total $1,147,730 TOTAL NET ASSETS INCLUDING SUPERANNUATION (Assets + Addbacks – liabilities + superannuation) Total $1,545,134 IS IT JUST AND EQUITABLE TO MAKE ORDERS ADJUSTING THE PARTIES’ PROPERTY INTERESTS?
But for the joint overdraft facility, the parties do not jointly own assets nor do they have liabilities in joint names.
As the parties’ legal and equitable interests currently stand, the wife solely owns or is responsible for assets valued at $710,135; superannuation of $71,990; and liabilities of $103,656. This represents 42% of the net asset pool excluding the joint overdraft facility. The husband solely owns or is responsible for assets valued at $921,667; superannuation of $325,414 and liabilities of $326,416. This represents 58% of the net asset pool excluding the joint superannuation facility.
It was not controversial between the parties that it was just and equitable to make orders under s 79 of the Act adjusting their interests in the property.
The parties were in a relationship for 11 years. Whilst there were no children of the parties’ marriage, each had children from previous relationships and the parties did, at various points and for significant periods, provide support for each other’s children.
It is not controversial that since their separation there has been no common use of the parties’ property and each of them agrees that this will continue to be the case in the future. However, they continue to be jointly liable for the overdraft facility and to the extent that they agree there will be no common use of their property they seek orders that will finally determine their financial relationships.
They each seek orders adjusting their property interests, but they are in dispute as to the quantum of the adjustment.
CONTRIBUTIONS
Turning then to the assessment of the parties’ respective contributions.
Initial contributions
At the time the parties commenced to live together, the wife had a Motor Vehicle 4, the value of which was unspecified; and personal belongings, furniture and effects which, I infer, were of nominal value. She had superannuation with Super Fund DD, the value of which was not deposed to by the wife, but which was received by her following a property settlement with a previous partner and I consider it was likely modest.
The husband had superannuation of $78,000. He otherwise had a newly purchased Motor Vehicle 5 for which he had paid $40,000. He had household contents of nominal value.
The Motor Vehicle 5 was used as a trade in vehicle for a subsequent motor vehicle used by the parties.
Direct and indirect financial contributions to the acquisition of property throughout the relationship
Financial contributions from salary or wages
The husband
Throughout the relationship, the husband worked in paid employment on a full time basis and it appears uncontroversial that his income has always been higher than that of the wife’s.
In his trial affidavit, he gave evidence that at or around the time the parties commenced their relationship he was earning income of about $110,000 per annum. He was cross-examined about evidence later appearing later in his affidavit that in 2006 – the year the parties commenced their relationship – he earned about $95,000 (gross) as a health care worker.
During cross-examination, he said that his evidence was based on his recollection rather than on tax returns. Insofar as he earned $110,000 per annum, it was whilst he was living in Town JJ, New South Wales and prior to him moving to E Street, Suburb F with the wife (and therefore prior to cohabitation). Insofar as his income dropped by about $15,000 per annum after moving from Town JJ, the tenor of his evidence was that the penalty rates and loadings were more favourable in Town JJ than in E Street, Suburb F, and so his income dropped.
The husband worked as a health care worker until 2008, when he commenced a role as a professional. In the first two years of that employment, he earned $65,000 per annum. After that, he earned $85,000 per annum for a further two years.
By reference to the Taxation Returns or Notices of Assessment in evidence, the husband’s income for the following financial years ending 30 June was as follows:
(a)2010: $66,242;
(b)2011: $70,420;
(c)2012: $89,076;
(d)2013: $95,344;
(e)2014: $94,532;
(f)2015: $88,386;
(g)2016: $87,431;
(h)2017: $120,945.
The husband’s pay was deposited into an account that was referred to as the “Ms Landon Account” – it being an account in the wife’s name but used by both parties. He gave evidence under cross-examination that this practice was established at or around the time of the purchase of the E Street, Suburb F property in 2007 and the wife’s account was used as a matter of convenience. Prior to that point his salary was deposited into an account in his name.
Although during cross-examination the wife could not recall the husband depositing his pay into the Ms Landon account, I am satisfied from the Ms Landon account statements that are in evidence that this occurred as set out by the husband.
The husband accepted that the household expenses and mortgage repayments were paid out of the Ms Landon account.
During cross-examination, the wife was unable to recall whether the husband’s income met most of the household expenses, although in circumstances where the husband was the higher income earner and where the wife’s deposits into the Ms Landon account comprised predominantly of child support payments and Centrelink benefits, it appears reasonable to conclude that this was so.
I therefore conclude that the husband’s income primarily – but not exclusively – met the mortgage repayments and household costs.
The wife
Before turning to the income the wife earned from employment, it is clear that throughout the parties’ relationship, deposits were made into the Ms Landon account by or on behalf of the wife. These were regular monthly payments of child support from her former partner in the vicinity of $1,337 and variable modest amounts received by way of family tax benefit.
During cross-examination, the husband gave evidence that he was unaware of payments received by the wife that were deposited into that account. When his attention was directed to the account statements in evidence, the husband agreed that the regular deposits into the account were his salary, the wife’s Centrelink benefits and the wife’s child support payments received from her former partner. It was not suggested to him that there were deposits beyond this from other sources such as either of the businesses.
Determination of the wife’s income from employment throughout the course of the parties’ relationship has been a difficult task. The wife gives no evidence in her trial affidavit that sets out with any particularity the income she received throughout the course of the parties’ relationship. It appears that the wife has taxation returns outstanding and so the evidence that might have more readily determined this issue was not available in the proceedings.
It is convenient to consider the wife’s income in two separate periods – that before, and that after, the motor vehicle accident.
Income prior to the motor vehicle accident
During the relationship, she undertook an apprenticeship, and opened a business called “Company D” in or around 2006 or 2007. The start-up finance for the business came via the ANZ Bank and the parties made a joint application for finance which was approved on 6 2007.
In around 2008, the wife expanded the enterprise to include the shop “Company N”.
At the time the business was established, the wife was a qualified tradesperson and had achieved her qualification in or around 2002. She commenced an apprenticeship around the time the business was established, and achieved her qualification in around 2012. From the time the business was opened, the wife employed a number of staff within the business including a fully qualified employee.
The wife’s trial affidavit was silent as to the earnings of either Company D or Company N. There were no personal or income tax records adduced in evidence by her and there were no accounting records for the business in evidence before the Court such as profit and loss statements or other ledgers. To the extent that there is evidence about the wife’s income during the course of the relationship and prior to the motor vehicle accident, it appears to come from secondary sources.
The wife deposed that prior to her motor vehicle accident, she worked 50 – 60 hours in the business each week. It would appear that whilst she worked hard in the business, it was not a profitable endeavour. She was asked about this during cross-examination. It was suggested to her that from 2007 until the motor vehicle accident in 2014, that there was little profit from the business once she had paid staff wages and overheads. She said she was unable to recall the figures from so long ago.
The wife made a motor accidents claim under the Motor Accidents Compensation Act 1999 (NSW). During the course of those proceedings, the wife provided a statement to the Motor Accidents Claims Assessment and Resolution Service (“CARS”) in support of her claim.
Whilst the statement does not provide much by way of evidence about the wife’s income, the following matters can be gleaned:
(a)The wife opened Company D and within the business, there was also the shop Company N. Company N was established in or around 2012 after the wife obtained her qualifications.
(b)In or around 2012, one of the employees left the business and she struggled to find an employee to manage Company N. She informally sub-let the space in the Business to other tradespeople to cover the cost of the rent. Later, another of her employees left the business and set up shop in the vicinity of the wife’s business, taking clients with her. During the period 2013 – 2014, she was not earning any income from the business.
The question of the wife’s income was considered by the CARS Assessor. By reference to the decision of the Assessor annexed to the husband’s affidavit, the Assessor concluded that in the period prior to the motorbike accident, the wife’s earnings were as follows:
(a)2011: $40,133;
(b)2012: $51,102;
(c)2013: $54,091;
(d)2014: ($3,306).
There was no reference in those reasons to the wife’s income prior to 2011.
The CARS Assessor concluded that the businesses were not profitable and it appeared that the wife did not cavil with that proposition in cross-examination.
There are a number of difficulties in relying upon the findings of the CARS Assessor about the wife’s earnings and reaching a conclusion in these proceedings that the wife in fact received those amounts after business operating costs were met.
It is clear from the reasons of the CARS Assessor that he did not have the wife’s personal or business tax returns available to him when he made his findings.
Insofar as he relied upon a report and supplementary report of Mr KK to make his findings about the wife’s income, those reports were not in evidence in these proceedings. I am unaware as to the information – by way of instruction, assumption or other documentary evidence - that was available to Mr KK in formulating his opinion as to the wife’s earnings from the business.
These difficulties may be less significant and the CARS Assessor’s findings might be a more easily accepted conclusion about the wife’s income during this period if it was the only evidence about the wife’s income before the Court. However, it is not so.
By reference to the husband’s income tax records in evidence, it appears that for taxation purposes, he reported to the Australian Taxation Office that the wife’s income for the following years (ending 30 June) was as follows:
(a)2010: $0
(b)2011: $0
(c)2012: $0
(d)2013: $5,000.
(e)2014: $61,000.
The husband was cross-examined about these documents. He gave evidence that he obtained these figures verbally from the wife, without reference to any documents prepared by her. He gave evidence that all of the financial records for the business were sent to the business, rather than to the home address and he did not see them.
The husband agreed that prior to the motor vehicle accident, he observed the wife go to work and agreed that she appeared to be busy. He was asked whether he was concerned or sought to have a discussion with the wife when, having regard to these matters, she told him in some years that she had no taxable income and in 2013, she had taxable income of $5,000 in the financial year ending 30 June 2013. He replied that he did not know how business taxation worked. He denied being involved in lodging partnership tax returns with the wife, and he gave evidence that she took out her own ABN so he had never seen a tax return for the businesses. He gave evidence that he did not initiate discussion with the wife about it because he trusted her in the running of the business.
The husband’s evidence in this regard appears consistent with the wife’s evidence in her trial affidavit that she was the person who worked in the business full time, that she managed clients and the business staff, and that the husband did not participate in the running of the business.
It was not suggested to the husband during cross-examination that the wife in fact earned income in the amount set out in the reasons for decision from the CARS Assessment.
It is not possible to resolve, with any precision, the question of the income the wife earned from employment prior to her motor vehicle accident. Through the course of cross-examination, it was suggested to the wife that there were 3 sources of income going into the Ms Landon account – the wife’s child support, the wife’s Centrelink benefits and the husband’s salary. The wife did not disagree with this proposition and lead no evidence as to any habit or pattern or practice of depositing income earned by her in the business into the Ms Landon account nor of bringing the income home in some other way, such as cash. She does not give evidence as to how the income received her from the businesses was applied for the benefit of the parties other than to say that throughout the relationship she paid for groceries and met the parties’ other living expenses. She contended that she paid most of the expenses for holidays the family took to Country LL, Country MM and Country NN. There is no evidence, however, of her capacity to do so other than from the Ms Landon account.
Insofar as I can make any determination at all, the Ms Landon account statements in evidence lead to the conclusion that to the extent the wife made any profit from the business prior to the motor vehicle accident, it did not find its way into the Ms Landon account and is otherwise not revealed elsewhere in the evidence.
The wife’s income after the motor vehicle accident
By reference to the husband’s tax returns, he recorded the wife’s income in the years (ending 30 June) after the motorbike accident as follows:
(a)2015: $50,000
(b)2016: $20,000.
Insofar as the matters that are contained in the husband’s tax returns (both pre and post the accident) about the wife’s income are to be considered, it is curious that at times that the wife was clearly not working, he accepted the information provided by her that she had income in the vicinity of $50,000. However, having regard to the fact that after the accident the wife attempting to work in the business and keep it going, and having regard to the fact that his parents were assisting to keep the business afloat by attending the premises, collecting the business takings and attending to other tasks, I do not consider that it is unreasonable for him to accept the information provided by the wife at face value, particularly when it is not controversial that the wife undertook the running of the business and the husband played no part in it.
Furthermore, this is a not a case where it appears either party had a particular practice of reviewing their banking records or monitoring their spending. It appears that neither was particularly concerned about the state of their finances as long as the mortgage was paid and there were sufficient funds to meet their living expenses.
It was not controversial that following her motor vehicle accident until the date of separation the wife did not earn income. The CARS Assessment included an award for past economic loss and the CARS Assessor determined that for the period from the date of the accident until the date of the award, the wife sustained economic loss of $128,876 after income earned by her in 2017 – 2019 was taken into account. This matter will be considered further under post separation contributions.
The purchase of the former family home
In 2007, the parties purchased the property at E Street, Suburb F. The property was purchased in the husband’s sole name for the sum of $465,000. It was financed by a mortgage of $371,000 and by $106,000 provided by the husband’s parents which was applied to the purchase and to stamp duty costs.
The wife did not make reference in her trial affidavit to the monies advanced by the husband’s parents, although she agreed during cross-examination that they advanced that money.
In his trial affidavit, the husband described those funds as a “loan” as did his mother in her affidavit. There was, however, no evidence of any loan agreement document, nor was there evidence that that sum had been – or would be – called in by the husband’s parents.
The husband accepted during cross-examination that just prior to the parties starting to jointly use the Ms Landon account, there was a balance of $55,000 in the account. He accepted that he had made no contribution to that amount and that it was the wife’s money.
On 18 January 2007, the sum of $50,938 was transferred out of the account. It was suggested to the husband that it was possible that that sum was directed to the purchase of E Street, Suburb F, but he replied that as far as he was aware, the wife contributed nothing to the purchase.
As was submitted for the husband, the possibility that such a sum was directed to the mortgage does not equate to a conclusion that the funds were so applied. Whilst the sum of $50,938 was transferred out of the Ms Landon account, there is no corresponding deposit into the home loan account at or around that time.
The wife does not give evidence that the sum of $50,938 was applied by her to the home loan and the totality of evidence does not support the conclusion that she contributed $50,938 to the purchase of the home.
In his affidavit, the husband deposed that on 21 June 2007, he paid a further $100,000 onto the home loan from an inheritance he received from his grandmother’s estate. He deposed that in addition to the $100,000 he received the sum of $69,000 from his estate that was applied to general living and leisure expenses.
During cross examination, the wife agreed that on 21 June 2007, $100,000 was paid into the home loan account. The wife was unaware of the source of those funds, but conceded that she did not make that payment and that her family did not make that payment. When she was asked whether, by process of elimination, she would accept that the money came from the husband or someone on his side of the family, the wife would not accept that proposition and replied that she needed proof of where the money came from.
Having regard to the husband’s affidavit evidence, the affidavit evidence of his mother, and the bank statement records in evidence, I am satisfied that on 21 June 2007, the husband paid the sum of $100,000 onto the home loan and that the source of those funds was the inheritance he received from his grandmother’s estate.
Accordingly, to the extent that financial contributions have been made to the purchase of the former family home, I find that the wife did not make any direct financial contribution other than what was available from her child support and Centrelink payments. The husband contributed – through his parents and through an inheritance – the sum of $206,000, and otherwise, his income was applied to meet the mortgage and family’s living expenses.
Contributions to the welfare of the family
Whilst there were no children of their relationship, each of the parties had children from other relationships.
At the time the parties commenced to live together in 2006, the wife had three children, X (then aged 11 years); Y (then aged 9 years) and Z (then aged 7 years). The husband had two children, J (then aged 6 years) and K (then aged 3 years).
There are factual disputes between the parties about the amount of time each party’s children lived in the husband and wife’s household. By closing submissions, however, each party accepted that the contributions made by them would fall within the rubric of equality.
There is one area, however, in which the parties were in dispute and that is the extent to which the husband’s contributions following the motor vehicle accident contributed to the award of compensation. This dispute will be considered further below.
Post separation contributions
The mortgage over the E Street, Suburb F property
As earlier observed, in July 2017, the husband refinanced the mortgage over the E Street, Suburb F property. In addition, he borrowed further funds secured against the property which were applied to the consolidation of debt and living expenses.
The husband has been servicing that debt since July 2017. The wife has made no financial contribution to the servicing of the debt.
To the extent that the refinancing by the husband incorporated the existing mortgage over the former family home and to the extent that the former family home remains in the property pool it is as a consequence of the husband’s post separation financial contribution to it.
It is, however, important to recognise that he has had the benefit of living in the former family home since separation to the exclusion of the wife.
The portion of the refinance that exceeded the existing mortgage over the former family home will be considered later in these reasons under the s 75(2) factors.
The wife’s CARS award
Following her motor vehicle accident, the wife pursued a compensation claim and received an award comprising the following amounts:
(a)Economic losses:
(i)Past treatment: $59,866.65
(ii)Future treatment: $35,000.00
(iii)Past economic loss: $128,876.00
(iv)Past superannuation: $7,008.00
(v)Future economic loss: $250,993.00
(vi)Future superannuation: $17,356.00
(vii)Past voluntary care: $22,494.00
(viii)Future paid care: $87,276.00
(b)Non-economic loss: $250,000.00
Total damages awarded: $858,869.65.
After costs already paid by the insurer and other costs and disbursements were accounted for, the wife received the sum of $669,484.11. Having regard to my earlier findings, I am satisfied that $668,000 of the award received by the wife after costs and disbursements were repaid was applied to the purchase of the B Street, Suburb C property and the wife’s interest in that property has been included in the asset pool.
It was not controversial that the wife’s award of compensation (excluding costs already paid and other costs and disbursements) should be treated as a contribution made by her. That award now vests in the B Street, Suburb C property which is a significant, unencumbered asset. It comprises about 43% of the net value of the property pool (including superannuation).
The parties diverged, however, on the issue of whether or not the husband made any contribution to the award received by the wife and if so, whether or not the evidence supported a quantification of that contribution.
The husband accepted that to the extent that the wife’s award included a component for “pain and suffering” – that is, a non-economic loss component – then that portion of the award should be treated as her sole contribution. The decision of the Full Court in Aleksovski & Aleksovski [1996] FamCA 111; (1996) FLC 92-705 supports this approach and counsel for each party made reference to it in this regard.
Accordingly, it can safely be concluded that from her compensation award, the wife made a contribution of $250,000 being that part of the award allowed for non-economic loss and that it should be considered a contribution made solely by her to which the husband did not contribute.
Beyond that, the husband contended that he made a contribution to the compensation award insofar as it relates to past economic loss (up to the point of separation); superannuation (up to the point of separation); and voluntary care (up until the date of separation) and that his contribution ought be recognised.
The wife did not dispute that when considering a party’s contributions by way of a compensation award, the Court may give consideration to the contribution – if any – made by the non-injured spouse to components of the award such as past economic loss, past superannuation and voluntary care (also referred to as the “Griffiths v Kerkemeyer” component of the award). Indeed, where an award includes a component for past voluntary care, and where the non-injured spouse provided that care in whole or in part, it has been considered to have been a contribution by that person (see Gaspaldi & Gaspaldi [2008] FamCAFC 134).
It was submitted for the wife, however, that the evidence in this matter does not allow the Court to reach any conclusion about the contribution made by the husband for the past voluntary care portion of the wife’s compensation award.
Counsel for the wife observed that in Gaspaldi the award to the husband was the result of a compromise and hence there was no breakdown of its component parts. In that case, the husband conceded that the award would have included a “Griffiths v Kerkemeyer” component and it was agreed between the parties that that component would have been in the region of 7.5% of the award. As was pointed out by counsel for the wife, there is no such concession in the present case and it was submitted that in that regard, this circumstances of this case can be distinguished from those in Gaspaldi.
In the present case, the wife’s claim for motor accident compensation was determined by a CARS Assessor. The award to the wife was not arrived at by compromise, but rather on the basis of the findings of the CARS Assessor. The CARS Assessor specified the components of the award that relate to past voluntary care, past economic loss and past superannuation loss as well as the amounts awarded for each of those components (which have been set out earlier in these reasons). In this regard, here – unlike in Gaspaldi – it is possible to quantify each of those components as a percentage of the wife’s award by reference to the CARS Assessor’s reasons for decision.
It was submitted for the husband that by reference to paragraph 50(a) of the reasons, that the wife’s past economic loss was assessed as $122,832 for the period from the date of the accident until the date of separation (or very close to). As I read that part of the decision, however, that reflects the wife’s contention in those proceedings rather than the Assessor’s findings.
The CARS Assessor considered that the wife had sustained past economic loss for the 5 year period from the accident until the date the award totalling $181,134. That amount was ultimately adjusted to take into account periods during which the wife worked in 2017 – 2019 (see paragraphs 69 and 71 of the Assessor’s reasons). It therefore appears reasonable to conclude that in the 2 years between the date of the accident and separation, when the wife did not work at all, her past economic loss would have been 2/5 of $181,134, that is $72,453. This sum represents 8% of the total award.
Adopting the same logic, past superannuation loss assessed over 5 years at $64,438 would equate to $25,752 being 3% of the total award.
Past voluntary care was assessed as $22,494 for the period from the date of the accident until late 2016 which is 2% of the total award she received. There was no award for past voluntary care after 2016.
In relation to past economic loss and past superannuation loss, it is clear that after the accident the wife was not earning income and therefore it fell to the husband to financially support the family at that time. Whilst the wife has subsequently been compensated for her past economic loss, it was money received by her well post separation and was not available to the parties during the course of their relationship. It is clear that the husband’s income was required and applied to support the household whilst the wife was unable to work. This must be recognised as a contribution by him in circumstances where the wife was unable at that time to make a financial contribution.
In relation to the past voluntary care component of the award, it does not automatically follow that where 3% of the award was for past voluntary care, the husband was the person who provided that care and should therefore be considered to have contributed 3% to the wife’s compensation award.
The wife provided $668,000 of the purchase price of the B Street, Suburb C property. The balance of the purchase price and the stamp duty on the purchase was provided by Mr O. As the wife has not disclosed that Mr O has assets, but has not disclosed that he has any liabilities, I have assumed that the wife and Mr O own the property outright and that it is not subject to any mortgage.
During cross-examination, the wife was asked about the H Motorcycle owned by her. She gave evidence that Mr O purchased the vehicle for her as a gift and registered it in her name. She also gave evidence that Mr O provided $50,000 to the purchase of the Motor Vehicle 1.
When asked how Mr O funded the purchase of the H Motorcycle and the Motor Vehicle 1, she gave evidence that she understood the money came from an inheritance Mr O received after his father passed away, and from a property settlement he received after a divorce. She said that she did not know the exact amount of inheritance that he received – she had not asked about it as it was Mr O’s personal business. She gave evidence that the divorce occurred over 12 months ago, and that she was unaware as to the amount Mr O received by way of property settlement.
Again, in the absence of any evidence that Mr O has liabilities, I assume that those purchases were made outright and there is no finance owing on the vehicles.
Whilst she was asked whether she had any sense of the value of either the inheritance or Mr O’s earlier property settlement, the wife was unable to give any estimation at all, saying that it was not her business.
In the absence of evidence from Mr O and in the absence of more particular evidence by the wife, it is not possible to make any precise finding about Mr O’s financial position and, therefore, the financial circumstances of the wife’s cohabitation with him.
It appears, however, that Mr O’s financial position is such that:
(a)In May 2019, his financial position was sufficient to enable him to establish a new business and he derived a wage of about $300 per week.
(b)At an undisclosed time, he received monies under inheritance after the passing of his father. The value of the inheritance is unknown.
(c)At an undisclosed time, he received monies under a property settlement following his divorce. The amount received by him in this regard is unknown.
(d)His financial circumstances have been sufficient to provide $187,127 toward the purchase of the B Street, Suburb C property (including stamp duty costs).
(e)His financial circumstances have also been sufficient to fund the purchase of the H Motorcycle (including accessories and on road costs) for $24,000 for the wife and $50,000 of the purchase price of the Motor Vehicle 1.
(f)His income and, or, assets are sufficient to continue to meet half of the rates and outgoings on the B Street, Suburb C property, as well as half of the registration, servicing and insurance costs for the wife’s vehicles and possibly all the totality of the costs on his own Motor Vehicle 6.
There is no evidence of any debt owed by Mr O to any person or financial institution.
During cross-examination, the wife gave evidence that there was no reason why Mr O was unable to swear an affidavit in the proceedings and that she had not considered it was necessary to obtain an affidavit from him. Given, however, that the Court is to consider the financial circumstances of cohabitation where a party has commenced cohabitation with another person, I consider that it was necessary for the wife to have made more disclosure of Mr O’s financial position than appears in her affidavit.
The husband seeks that the Court draw an inference against the wife by her failure to provide full and frank disclosure of the circumstances surrounding her cohabitation with Mr O. This cannot be considered to have taken the wife by surprise given that the disclosure issue had been raised between the parties’ solicitors in their pre-trial correspondence.
The authorities inform that where a party has made insufficient disclosure, the Court may make more generous provision for the party not in default. Caution must be exercised in this regard, however. As was observed by the Full Court in Kingston & Field (No 2)[1] (at [106]):
“Under well established guidelines (Black and Kellner (1992) FLC 92-287 at 79,133-79,134; Weir and Weir (1993) FLC 92-338 at 79,592-79,595; Chang v Su (2002) FLC 93-117 at [28]-[32], [57]-[72]), property settlement orders may make more generous provision for one party if it is inferred the other party improperly failed to fully disclose his or her financial affairs. However, when a trial court infers a party’s failure to disclose, it is worthy of consideration whether the failure relates to assets or income, because the receipt of undisclosed income over a period of time, without more, does not necessarily permit an inference to be drawn that the money is stashed away and available at will to the recalcitrant party.”
[1] [2020] FamCAFC 235.
I bear those comments in mind in considering whether the inference sought by the husband is available.
Mr O and the wife are in a committed relationship. There is nothing to lead to a conclusion that to the extent she has had the benefit of expenditure by him, that this will not continue into the future and that she will enjoy his financial support should she require it. Absent evidence from the wife about Mr O’s income beyond the estimate provided by her in her Financial Statement, and absent more particularised evidence about his financial circumstances, it is not possible to identify with precision, the extent of that support. The following matters, however, emerge on the evidence.
It appears that Mr O has sufficient income and or financial resources to sustain a significant level expenditure as set out above. In her Financial Statement the wife estimated Mr O’s weekly income at $300. In her affidavit, she deposed that Mr O paid himself around $300 per week until around June 2020. She deposed that his business was closed from 31 March 2020 until 20 May 2020 and since June 2020 the business received Job Keeper payments. She deposed that she and Mr O mostly eat out of the business.
Whether intentional or not, the impression created by the wife’s trial affidavit is that Mr O is experiencing a degree of financial difficulty from the impact COVID has had on his business which may have impacted on their household income. I accept that it is likely that a business would have experienced a period of difficulty when social distancing restrictions were imposed in New South Wales, but there is no evidence of whether that changed for Mr O’s business once restrictions were eased.
Although the wife contends that she and Mr O meet all costs within the household equally, Mr O has assisted – to a very significant extent – the purchase of the Motor Vehicle 1 and otherwise has gifted to the wife a H Motorcycle.
The order form for the Motor Vehicle 1 informs that it was purchased on 15 June 2020 and the deposit was paid on that date. The balance was due on delivery, estimated to have been 19 June 2020. Mr O applied approximately $50,000 to the purchase.
Whilst the wife gave evidence that the Motor Vehicle 1 is used by both her and Mr O, she also gave evidence that the licence plates on the vehicle – ... - is a reference to her name. Where Mr O also owns a Motor Vehicle 6, it appears more likely that the Motor Vehicle 1 was purchased more for the wife’s benefit than for the benefit of both of them.
The H Motorcycle (and accessories) was purchased by Mr O on 14 September 2020 at a cost of $24,000.
In the event that the wife and Mr O were experiencing financial distress or hardship as a result of the impact of COVID-19, it is difficult to understand why they would spend approximately $74,000 on motor vehicles during the pandemic.
The wife deposed that she will borrow funds from Mr O to meet her legal fees and that the monies will have to be repaid within 28 days of the conclusion of the property matter.
There is no loan agreement in evidence before the Court. Mr O’s expenditure for the wife’s benefit in the past 12 months would suggest that it is unlikely that any loan would be called in by him. I also consider that Mr O may have the capacity to assist the wife in meeting her taxation liabilities, either by way of loan, or further gift.
Any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account
The husband’s refinancing of debt in 2017
As observed earlier in these reasons, in July 2017, the husband refinanced the parties’ mortgage over the E Street, Suburb F property with the Bank U. In addition to refinancing the mortgage, he obtained further finance for living expenses and to consolidate a number of debts including credit card debt and the finance over each of the parties’ motor vehicles.
For the reasons given earlier, I declined to add back those funds in whole or in part against the husband.
The parties were in agreement that the balance of the Bank U re-finance is $257,626. It was not controversial that this includes not only the amount outstanding under the mortgage, but the additional funds borrowed by the husband. Of that amount, $21,948 was applied to existing credit card debt and $32,813 was applied to the husband for living expenses and to the discharge of finance on his motor vehicle.
The husband gave evidence during cross-examination that at the time of the refinance, he borrowed additional funds beyond what was owing on the ANZ mortgage so as to secure a lower interest rate on the credit card and motor vehicle finance debt. The wife was asked about this during cross-examination but gave evidence that she did not know what the husband’s previous rate of interest was, and that she doubted the proposition that home loan interest rates were lower than credit card interest rates. She agreed that if a lower rate of interest could be obtained that it would be a financially prudent decision.
As observed earlier in these reasons, it has not been possible to identify what the credit card debt related to and it was not controversial that the wife was unaware of the existence of the credit cards. To the extent that the husband achieved a better rate of interest in relation to the credit card debt, whilst it may have been a prudent decision, in the absence of evidence that the credit card debt related to expenditure for the benefit of the parties it is more likely that the more favourable interest rate went to the husband’s sole benefit.
Insofar as the husband utilised funds to discharge motor vehicle debt on his own vehicle, there is little evidence on point other than the husband’s oral evidence that he owed about $24,000 on a vehicle at the time.
It would therefore appear that of the additional funds borrowed by the husband the sum of $54,761 was applied to the husband’s sole benefit and that amount is included in the liabilities on the parties’ balance sheet as a part of the Bank U mortgage over the E Street, Suburb F property.
To the extent that the sum of $3,921 was applied to discharge finance against the wife’s motor vehicle, it is a liability assumed by the husband for the benefit of the wife.
The Motor Vehicle 3 proceeds
As observed earlier in the proceedings, upon separation, the husband retained the Motor Vehicle 3 which was – at that time – subject to finance and which was subsequently sold by him.
The utility was sold for the sum of $24,000. That sum was applied by the husband to the purchase of a motorbike which was apparently on-sold or traded in against a subsequent vehicle.
It was not controversial that the Motor Vehicle 3 was purchased during the course of the relationship. The husband gave evidence during cross-examination that the vehicle was purchased under finance in his sole name. It was put to him that he seemed to draw a distinction between things financed to himself when it was his evidence that the parties put everything into the Ms Landon account and met household expenses from that account. The husband responded to the effect that that had been the case for a period of time, but that counsel may have been suggesting a different period.
Through cross-examination, it emerged that the husband purchased the Motor Vehicle 3 in or around February 2016. This was at a time when the Ms Landon account was in use by both parties and to the extent that the finance on the utility was being met from that account, then it was from the parties’ income.
The husband agreed that the sale proceeds from the Motor Vehicle 3 were deposited into his account, and he retained them for his sole use. To this extent, he has had the benefit of $24,000 to the exclusion of the wife.
Transfers to the husband’s parents
As observed earlier in these reasons, and by reference to the table of transactions set out at paragraph 105 of the wife’s trial affidavit, the husband accepted that he had transferred the sum of just under $30,000 to his parents following separation. As was observed by counsel for the husband, but for a small number of transactions, the transfers were all for relatively modest sums of money.
It was submitted for the husband that transfer of money to other family members is something that each of the parties did from time to time. By way of example, he referred to the wife’s Bank T statement and observed that in 2020, the wife transferred money to each of her sons for their birthdays.
The evidence does not allow me to comfortably conclude the extent to which either of the parties transferred funds to other family members throughout their relationship, and insofar as reference was made to the wife’s bank statement, it appears from the statements that the transfers were for birthday gifts. Had the wife purchased gifts with those funds, rather than transferring the money, it is unlikely that reference would have been made to the transactions at all.
There is no explanation given by the husband at all as to the purpose of any of the transfers of funds to his parents. Neither of his parents reference the transfers in their affidavits. It is possible that he considered that it was repayment in part of the funds advanced to him by them for the purchase of the E Street, Suburb F property. It is possible that it was in response to a request made by them of him. But in the absence of evidence, I can make no finding about such matters.
It therefore appears that since separation, the husband has transferred the sum of $29,233 to his parents. Whilst it was suggested for the husband that each party was in the habit or the practice of making cash transfers to family members, the only evidence in support of that proposition in relation to the wife’s expenditure was the transfer of birthday monies to her children in 2020. The evidence does not support a finding that the parties’ behaviour in this regard was equivalent.
Accordingly, I consider that had these transfers not occurred, that money would be available for inclusion in the property pool and the husband has had the benefit of those funds to provide to his parents.
W dirt bikes
As observed earlier, the husband has two W dirt bikes in his possession. The evidence does not disclose with particularity the value of the bikes nor the liabilities on them. The best evidence available informs that they are valued at or around $12,000 and that there is finance owing on them. The effect of the orders sought by each party would see the husband retain those bikes.
Sale proceeds from the Shares EE
As observed earlier in these reasons, the husband received Shares EE as a part of an inheritance. Those shares were sold by him in October 2018 and he received $12,000 for them. The shares were acquired throughout the course of the parties’ relationship and the husband has had the sole benefit of those funds.
The taxation and business liabilities
It is not controversial that the wife has taxation liabilities of $103,656 arising from the conduct of the businesses. It also appears that at the time the businesses closed the wife was unable to negotiate an exit from the lease in the shopping centre in which the businesses were located and at some point, the shopping centre called in the bank guarantee for unpaid rent in the amount of $41,000 which was incorporated into the joint overdraft account.
Some of the wife’s tax debt appears to have accrued following the motor cycle accident. I accept that it would have been inordinately difficult for the wife to attend to her taxation affairs after the accident and it is unsurprising that Business Activity Statements were not lodged after the accident.
But it is clear that the wife’s taxation affairs were not in order well prior to the accident. The wife deposed in her trial affidavit that the debt accrued due to unpaid wages tax and GST. It is clear, however, that the wife had not lodged - or was very late in lodging – Business Activity Statements for the businesses for some years prior to the accident. She had not met the obligations that would have arisen had the Business Activity Statements been lodged. Her failure to attend to these matters resulted in significant penalties being levied against her which in turn attracted interest penalties.
The husband deposed evidence that in early 2015, the wife informed him that she owed the Australian Taxation Office $55,000 but that she reassured him that it was “under control”. In 2015 whilst the wife was overseas, the wife received a letter from the Australian Taxation Office which the husband opened, being notice of taxation debt of $97,000. The husband gave evidence that he raised it with the wife who again reassured him it was being sorted out. The husband deposed that he withdrew $9,000 from the redraw facility on the home loan to apply to the debt.
The wife was taken to this during cross-examination, but did not concede that the husband transferred these funds on her behalf. She maintained that she could have paid that amount herself. She was unable to explain how she would have made that payment when she was not working at that time.
By reference to the wife’s Australian Taxation Office statement annexed to her affidavit and to the home loan statements annexed to the husband’s affidavit, I accept the husband’s evidence.
In her trial affidavit, she deposed that since separation, she has applied her personal income tax returns to the reduction of that debt as well as the reduction of the debt associated with the called in bank guarantee. She has not, however, adduced evidence of her income tax returns to enable an assessment of the extent of her efforts in that regard. The debt stood at $103,656 as at the date of the hearing.
There is no evidence given by the wife as to why she did not attend to her taxation affairs prior to the motor vehicle accident. She deposed that her solicitor for the CARS claim negotiated a $56,523 reduction in the debt, but otherwise does not explain how it accrued in the first place. The wife’s unexplained actions in this regard have resulted in a significant liability which is included in the parties’ asset pool.
FINDINGS IN RELATION TO THE SECTION 75(2) FACTORS
Consideration of the s 75(2) factors demonstrates that an adjustment in favour of the wife is warranted.
It is clear that the motor vehicle accident impacted on her capacity to work in her chosen field and impacted on her capacity to obtain and maintain full time employment. It was submitted for the husband that the wife has already been compensated for this in the future economic loss component of the award she received. Whilst this is true, consistent with the approach taken by the parties in submissions, I have approached the compensation payment and its component parts as a financial contribution on the part of the wife. The compensation award now vests in the wife’s interest in the B Street, Suburb C property and insofar as the future economic loss component was applied to the purchase of that property it has – in effect – been applied to the benefit of the parties by the inclusion of the B Street, Suburb C property in the pool of assets.
Accordingly, some consideration must be given to the disparity between the parties’ respective income earning capacity.
The difficulties in assessing the wife’s income have been addressed earlier in these reasons. Even if the accident had not occurred, it appears likely that the wife would not have the same income earning capacity as the husband. There is no evidence that she has ever earned more than the husband and it appears that this will continue in future.
At the time of the final hearing, the wife’s average weekly earnings pre-tax were $550 per week. She disclosed average weekly expenditure of $127 on income tax of $50, rates, and vehicle costs. She has no mortgage or rental costs. It is reasonable to assume that she has other regular costs such as groceries, utilities and the like. The husband’s average weekly earnings pre-tax were $3,064. His weekly income tax was $955. He had mortgage, rates and home insurance expenses of $455 per week.
Clearly, there is a significant disparity between the parties’ income and income earning capacity. Accordingly some adjustment must be made to reflect the disparity in the income earning capacity of the parties.
As against this, however, the husband will have ongoing mortgage or rental costs that the wife will not have given that she and Mr O own the B Street, Suburb C unencumbered.
At separation, the husband retained the Motor Vehicle 3 which had been purchased throughout the parties’ relationship. He has had the benefit of the sales proceeds of the Shares EE, as well as the post-separation funds obtained through the refinance of the E Street, Suburb F mortgage. I observe that a very modest portion of that refinance was applied to discharge debt outstanding on one of the wife’s vehicles, and that to the extent that that debt was being serviced, it was being serviced by the husband from earnings from his post-separation endeavours.
The husband has transferred the sum of $29,322 to his parents. That sum would have been available to the parties, but for its transfer.
The husband has, therefore, had the benefit of almost $120,000 of funds from assets from the relationship that have been realised by him, or under credit obtained by him during the relationship. This is a significant amount of money.
The wife has significant taxation liabilities and she gives no explanation as to how that came to be prior to the motor vehicle accident in circumstances where on her own evidence she was the one who was running the business. The taxation debt has been included in the parties’ liabilities and reduces the money available for distribution between the parties. There is no evidence given by her as to why she did not apply part of her compensation award to the discharge of that debt, nor why the funds applied by Mr O to the H Motorcycle or to the Motor Vehicle 1 could not have been applied to the reduction of her taxation debt. The expenditure on the vehicles would have met 70% of the wife’s taxation liability.
To the extent that she contends she cannot afford to repay the taxation liability, the evidence indicates that Mr O is likely to be in a position to assist her in this regard.
WHAT ADJUSTMENT SHOULD BE MADE HAVING REGARD TO THE S 75(2) FACTORS?
Having regard to all of these matters, I consider that an adjustment of 12% should be made in favour of the wife having regard to the relevant s 75(2) factors.
CONCLUSIONS AS TO ADJUSTMENTS
Having regard to the conclusions as to the adjustments arising from the assessment of the parties’ contributions and the relevant s 75(2) factors, I consider there should be an overall adjustment of 6.5% in favour of the husband.
FINAL ORDERS: JUSTICE AND EQUITY
The Court’s obligation is to do justice and equity between the parties. The orders sought by the wife would have the following effect:
(a)The husband would pay to her the sum of $365,000.
(b)The husband would discharge the overdraft facility in the sum of $54,000.
(c)In the event he failed make payment of the cash adjustment and, or, discharge the overdraft facility, the E Street, Suburb F property would be sold with the wife to receive 68% of the sale proceeds after the mortgage and the overdraft facility was discharged.
(d)The wife would also receive a superannuation splitting order in her favour with a base amount of $126,000.
(e)Each party would otherwise retain the respective assets and liabilities in their sole name.
The effect of such an order would see the wife retain about 75% of the net property pool. This is not consistent with the conclusion I have reached as to adjustments.
The order sought by the husband would have the following effect:
(a)Each party would retain the assets held in their sole name and their superannuation.
(b)The wife would retain and be responsible for the ATO debt.
(c)The husband would retain and be responsible for debts in his name for the vehicle finance and the mortgage over the E Street, Suburb F property.
(d)The husband would otherwise discharge the overdraft facility.
In the husband’s outline of closing submissions, the husband contended that the nature and effect of his orders was to secure an adjustment whereby he receives 61% of the property pool and the wife receives 39% of the property pool. I would not consider such an adjustment to be just and equitable. It is clear from the submissions, however, that this was premised on the Court reaching the conclusion that the net pool was valued at about $1,400,000.
Where I have concluded that the net pool is valued at $1,545,134, the effect of the orders sought by the husband is that he would receive 56% of the net property pool.
This falls just short of the adjustment I consider should be made in favour of the husband by 0.5%.
It was submitted for the wife that the orders sought by the husband fail to recognise the contribution made by the wife prior to the receipt of the compensation award which occurred post separation. The consequence of this would be that everything the parties worked for and accumulated up to the date of their physical separation would lie with the husband and the wife would retain only what she received post separation and would otherwise take on the liability for her taxation debt.
There is difficulty with that submission. In relation to the parties’ contributions prior to separation I have concluded that the husband’s financial contributions outweighed those made by the wife. This included during the period prior to the motorcycle accident where it appears the wife’s income was primarily her child support payments and Centrelink payments and the period post the accident when she was without income. Their contributions as parent and homemaker were assessed as falling within the rubric of equality prior to the accident, and slightly favouring the husband in the period after the accident.
The wife’s financial contributions prior to the accident were difficult to find beyond her Centrelink benefits and her child support. Despite the fact that she was working long hours in the business, it does not appear that the businesses were making profit and the husband’s income was applied to meet the mortgage repayments and the household expenses. To the extent that the businesses were making money, there is little evidence given by the wife as to where that money went. Her business taxation obligations were unmet and there is no evidence of deposits into the Ms Landon account from the businesses.
The compensation award has been treated as a contribution by the wife. But for a modest contribution made to it by the husband, it has been given weight in the assessment of the parties’ contributions. It includes the sum of $128,876 by way of past economic loss from the date of the accident until the award was made on 21 February 2020. To the extent that the wife’s injuries prevented her from earning income after the accident and before separation, it is compensated for in that proportion of $128,876 that relates to the period from the date of the accident until the date of separation.
Had those funds been received as income by the wife during the relationship, they may have been applied to the E Street, Suburb F property mortgage and to the household expenses. Where, however, they were received after separation, they have been applied by the wife to the purchase of property. The contribution the wife could have made during the relationship from income but for the accident is now found in her interest in the B Street, Suburb C property and her contribution in this regard has been recognised.
For those reasons, I do not accept that the orders proposed by the husband fail to recognise the wife’s contribution prior to separation. The reality of the parties’ situation was that the husband’s financial contributions came first in time prior to separation. The wife’s were made post separation. That fact does not mean that they have not been taken into consideration.
The orders proposed by the husband would see an adjustment in his favour of 6%. This does not achieve an adjustment of 6.5% in the husband’s favour. However, as I understood the submissions made for the husband, he contended that the orders proposed by him do justice and equity between the parties and whilst he considered he may have a good case for a greater adjustment in his favour, he did not seek an adjustment beyond what the orders sought by him provided for.
I therefore consider that justice and equity will be done between the parties by making the orders sought by the husband to the effect that he retains 56% of the parties’ property pool and the wife retains 44% of the property pool. I consider that the orders proposed by the husband achieve that result.
I certify that the preceding three hundred and sixty-one (361) numbered paragraphs are a true copy of the Reasons for Judgment of Judge M Neville. Associate:
Dated: 31 May 2021
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