LANDRY & TALFORD
[2020] FCCA 3442
•17 December 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LANDRY & TALFORD | [2020] FCCA 3442 |
| Catchwords: FAMILY LAW – Property – 34 year marriage –– a consideration of “property of the parties to the marriage”– where the husband maintains that an oral agreement was reached in relation to the parties’ property interests – where the wife disputes the existence of an agreement – pool – add backs – contributions – future needs – justice and equity. CONTRACT – Certainty of terms – where the husband maintains that an oral agreement was reached in relation to the parties’ property interests – where the wife disputes the existence of an agreement. TRUSTS – Discretionary trust – where the husband and the wife are both trustees of the trust – where both of the parties to the marriage are beneficiaries under the trust – where the husband is the Appointor of the Trust – where the husband controls the Trust. EVIDENCE – The need for clarity in relation to issues and evidence – onus of proof – lack of clear explanations in the husband’s evidence – lack of expert evidence concerning beneficiary loan accounts and Trust distributions. PROCEDURE – Failure by the husband to make proper and timely disclosure especially in relation to all relevant taxation returns and financial statements. |
| Legislation: Family Law Act 1975 (Cth), ss.4, 44(3), 75, 79, 90G Matrimonial Causes Act 1959 (Cth), s.86(1) Matrimonial Causes Act 1857 (UK), s.45 Evidence Act 1995 (Cth), s.140 |
| Cases cited: Bevan & Bevan (2013) 279 FLR 1 NHC & RCH (2004) 186 FLR 204 Stanford v Stanford (2012) 247 CLR 108 Harris & Dewell [2018] FamCAFC 94 Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 Kennon v Spry (2008) 238 CLR 366 Stephens v Stephens (2007) FLC 93-336 Milankov & Milankov (2002) FLC 93-095 JEL v DDF (2001) FLC 93-075 In the Marriage of Kelly (No.2) (1981) FLC 91-108 In the Marriage of Ashton (1986) FLC 91-777 In the Marriage of Davidson (No.2) (1990) 101 FLR 373 In the Marriage of Duff (1977) 29 FLR 46 Trevi & Trevi [2018] FamCAFC 173 Thorby v Goldberg (1964) 112 CLR 597 Taylor v Johnson (1983) 151 CLR 422 The Laws of Australia – Contract: General Principles; p. [7.1.380] |
| Applicant: | MS LANDRY |
| Respondent: | MR TALFORD |
| File Number: | BRC 3534 of 2018 |
| Judgment of: | Judge Howard |
| Hearing dates: | 2, 3, and 4 September 2019, 23 April 2020 and 17 August 2020 |
| Date of Last Submission: | 17 August 2020 |
| Delivered at: | Brisbane |
| Delivered on: | 17 December 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms Laylee |
| Solicitors for the Applicant: | Hawkes Lawyers |
| Counsel for the Respondent: | Mr Wilson |
| Solicitors for the Respondent: | Armfield O'Brien Law |
ORDERS
That by no later than 4:00pm on 7 January 2021, the Applicant shall provide a copy of a proposed Final Order (reflecting the Reasons for Judgment) to the Respondent and a copy of the same to the Court at [email protected].
That by no later than 4:00pm on 28 January 2021, the Respondent shall provide any reply to the proposed Final Order to the Applicant and a copy of the same to the Court at [email protected].
That the parties shall attempt to reach an agreed position in relation to the wording of the Final Order (reflecting the Reasons for Judgment) and shall send a copy of same to the Court by no later than 4:00pm on 18 February 2021.
That in the event the parties are unable to reach an agreed position in relation to the wording of the Final Order (and send a copy of same to the Court) within the time frame stated in paragraph 3 above herein – the matter shall be listed for Mention and each party shall attend personally along with their legal representative (if any) on a date to be fixed by the Court.
IT IS NOTED that publication of this judgment under the pseudonym Landry & Talford is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 3534 of 2018
| MS LANDRY |
Applicant
And
| MR TALFORD |
Respondent
REASONS FOR JUDGMENT
Background
The applicant wife was born in 1957.
The respondent husband was born in 1954.
The parties met in 1977 and were married in 1978.
The parties had very little by way of assets at the commencement of the relationship. The husband owned a six year old motor vehicle, two motorcycles, a trailer, some tools of trade and some other minor items. The wife owned a sewing machine.
To all intents and purposes the current property pool comprising a net value of $1,574,000 was built up by the parties together during the course of their 34 year relationship.
The relationship ended on 14 November 2011 when the husband informed the wife that he wanted a divorce. A divorce order was made on 8 June 2014. The wife commenced proceedings in the Federal Circuit Court of Australia with the filing of an Initiating Application on 1 April 2018. The application filed was out of time – but his Honour Judge Jarrett made an order on 5 June 2018 (pursuant to section 44(3) of the Family Law Act 1975) to the effect that the leave sought by the wife to proceed out of time was granted.
The parties have two adult children of the relationship – born in 1981 in 1983, respectively.
When the parties met – the husband was working for Employer B. He worked in an engineering role. The wife was working at the Employer C as a health care worker.
After the parties were married the husband stayed working in a full-time role with Employer B for approximately a further nine years.
In 1982, while he was still employed by Employer B, the husband started a business named, “D Services”. The business name for “D Services” was registered in the wife’s name – because Employer B did not permit full-time employees to have a second job. “D Services” is a business which provides parts and supplies and other engineering equipment. Originally, the business operated from the family home in Suburb E. I accept the wife’s evidence that she assisted the husband in the running of the business.
The husband's employment with Employer B ended in approximately 1988. In that same year, the business premises moved from the family home at Suburb E to a leased warehouse at F Street, Suburb G, Brisbane.
The business operated from F Street for approximately 16 years. In about 2004 the business premises moved to H Street, Suburb G. The business was conducted at those leased premises for five years until 2009. In 2006 the Talford Property Trust purchased a property – namely a warehouse at J Street, Suburb G. In 2009 D Services (the business) transferred its business operation to J Street, Suburb G (the J Street, Suburb G property).
It is convenient at this stage to make reference to the Talford Property Trust. The first annexure to the husband’s trial affidavit (filed 28 August 2019) is a copy of the Trust deed for the Talford Property Trust. The date of the deed is 1994. The Trustees are the husband and the wife. The beneficiaries as they appear in the original Trust deed are:–
1.Mr Talford;
2.Ms Landry;
3.Ms K; and
4.Mr L.
Ms K and Mr L are the daughter and the son of the parties. It seems from the wife’s affidavit filed 1 April 2018 (annexure 1) – that the husband’s current partner, Ms M – is now also a beneficiary of the Trust.
In the following year a further deed was signed by the husband. It is dated 1995. It forms part of annexure 1 to the husband's trial affidavit. The husband has described his annexures as "exhibits” – for instance exhibit " – 1". I will refer to those documents as annexures. Paragraph 1.10 of the Trust deed states:-
110. “‘The Principal’ means the person named and described as such in the Schedule hereto.”
By paragraph 6 of the Trust deed the Principal (the husband) has the power to appoint additional beneficiaries. Both of the Trustees (the husband and the wife) signed the Trust deed.
In the schedule of the Trust deed the Principal is stated as, "Mr Talford". Paragraph 3 of the Trust deed states:-
“Discretions as to income of the Trust fund
3.1 The Trustee shall in each year determine the income of the Trust fund after allowing for all expenses of the Trust fund.
3.2. The Trustee may at any time prior to the expiration of any year which ends before or upon the Perpetuity Date determine with respect to all or any parts of the Income of the Trust Fund of such year:-
i. To pay apply set aside the same or any part thereof for all or one or more of the Primary, Secondary and Tertiary beneficiaries living or in existence at the time of the determination and or;
ii. To accumulate the same or any part thereof;...”
Notwithstanding the provisions of paragraph 3 of the Trust deed – the only Trustee who has been involved in determining whether or what payments may be made from the income of the Trust fund has been the husband. The wife has not been consulted in this regard. Since separation the wife has definitely not been consulted in this regard, but has received distributions from the Trust – as determined by her fellow Trustee, the husband.
The Trust deed itself provides in paragraph 9.3 that the Principal has the power to appoint and remove Trustees. The Principal is Mr Talford. As all the other evidence in the case indicates – Mr Talford has control of the Trust. The control exercised by Mr Talford vests in him via the Trust deed itself. He is both the Principal and the Appointor. He is also, of course, a Co-Trustee – with the wife. However, he does not at any time consult the wife in relation to the operation of the Trust.
I accept the wife’s evidence that after final separation (14 November 2011) the husband dictated to the wife what was going to happen next. The former matrimonial home was situated at N Street, Suburb O. I note the wife’s affidavit filed 2 August 2019. In particular I note the following evidence by the wife:-
“26. When the Husband told me that he wanted a divorce in 2011 he dictated that our family home which was situated at N Street, Suburb O be sold. Prior to selling that house, the husband dictated that I would take part of the net sale proceeds of the former family home.
27. The house was sold, and I received part of the net sale proceeds of about $350,000 in or about February 2013.
28. This part of the net sale proceeds of the house was decided by the Husband in consultation with the children without me having any say. At the time I suggested to the Husband we do marriage counselling, however he declined.
29. I do not know how the Husband and the children decided my proportion. This conduct by the Husband (and the children) is indicative of the way I was treated and regarded by the Husband.
30. The children's dismissive and condescending treatment towards me is reflective of the Husband’s dismissive and condescending attitude towards me during our marriage and after our divorce.”
I accept this evidence of the wife except that the net proceeds received by the wife was $394,940. I accept that the husband dictated to the wife what would be occurring post separation. It is not surprising that the wife received a larger proportion of the net sale proceeds from the sale of the N Street, Suburb O property. She had no other assets and she had no other reasonable means of accumulating any significant assets. She also had no income. The husband had an income from business – which was, of course, another asset of the parties to the marriage.
The property at N Street, Suburb O was sold for $535,000. $115,750.82 was paid to the mortgagee and towards other costs of sale. The wife received the sum of $394,940.
In about late 2013 the wife purchased a property at P Street, Town Q. The wife used money that she had received from the sale of the former matrimonial home to purchase the property at P Street, Town Q.
In about 2018 the wife sold the P Street, Town Q property and received net sale proceeds of approximately $407,000. At around that time, the wife purchased her current residence – a unit at R Street, Suburb S. The purchase price was $325,000. As to the balance that the wife had received following the sale of the P Street, Town Q property (approximately $82,000) – I accept the wife’s evidence that she spent some money toward renovations on the unit at R Street, Suburb S and I also accept the wife’s evidence that she has had to use that money to pay for living expenses – noting in particular that the husband caused the Trust to stop paying the weekly distributions to the wife ($770) after the unsuccessful mediation in February 2019.
In his trial affidavit (filed 28 August 2019) the husband states that Trust distributions were paid (from the Talford Property Trust) to the wife in the amount of $770 per week after tax. The husband's evidence is that an agreement was reached between the husband and the wife that the payments made to the wife of $770 per week would be “in lieu of any claim over the assets of the trust” (Note the husband's trial affidavit at paragraph 52(b)). In addition, the husband also says that the payments to the wife ($770 per week) “would be debited to her account in any future property settlement.” (Note paragraph 55(c) of the husband's trial affidavit). I note that the sole asset of the Trust is the J Street, Suburb G property. I do note that when the J Street, Suburb G property was purchased in 2006 – by the Talford Property Trust – it was, essentially, purchased utilising resources which had been accumulated by the husband and the wife throughout the marriage. These resources included savings during the course of the marriage; the business that had been built up during the course of the marriage; the borrowing ability of the Trust – which was supported by the proposed lease of the premises by D Services (the business). All of these resources were built up by the parties during the course of the marriage. In 2009 when D Services transferred its business operation to the J Street, Suburb G property – D Services (the business) began paying rent at a commercial rate to the Talford Property Trust. The rental income from D Services is the only income of the Trust.
The husband's evidence is that from 4 July 2012 until 20 February 2019 there was paid to the wife as distributions from the Trust (including tax paid on behalf of the wife by the Trust) an amount of $ 317,444.72. In the approximately seven years which elapsed between July 2012 and February 2019 the wife had no other regular income – apart from a period of time when she worked as an allied health worker. The wife relied upon the weekly distributions from the Trust.
In summary, the husband's argument is that there should be no further adjustment of property in favour of the wife pursuant to section 79 of the Family Law Act 1975 (Cth) (“the Act”). The husband maintains that the wife has received $394,000 from the sale of the former matrimonial home (N Street, Suburb O) and a further amount of $317,444.72 from the Trust. Accordingly, so goes the husband's argument, the wife has received in excess of $700,000 already and there should be no further adjustment in her favour.
On the other hand, the applicant wife seeks to retain her unit at R Street, Suburb S; and her other personal assets. The wife also seeks that the husband retains D Services and its bank account; his own personal assets and that he takes responsibility for his own personal liabilities, including the overdraft which is apparently in his name. In addition, the wife seeks an order that the J Street, Suburb G property be sold, and each party receive 50% of the net sale proceeds.
Section 79
The alteration of the property interests of the parties to a marriage is covered in Part VIII of the Act – in particular, section 79. Section 79(2) of the Act provides:-
“79(2) the court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.”
In Stanford v Stanford (2012) 247 CLR 108 the High Court, in considering the provisions of section 79 of the Act, referred back to its previous decisions in the family law jurisdiction, including cases such as Mallet v Mallet (1984) 156 CLR 605. From page 120 in Stanford, the High Court stated, inter-alia, as follows:-
“36. The expression ‘just and equitable’ is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition (Mallet v Mallet (1984) 156 CLR 605 at 608 per Gibbs CJ). It is not possible to chart its metes and bounds. And while the power given by s 79 is not “to be exercised in accordance with fixed rules” (Mallet v Mallet ), nevertheless, three fundamental propositions must not be obscured.
37. First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to ‘altering the interests of the parties to the marriage in the property’. The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
38. Secondly, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed (25) that a power (26) to make such order with respect to property and costs ‘as [the judge] thinks fit’, in any question between husband and wife as to the title to or possession of property, is a power which ‘rests upon the law and not upon judicial discretion’. And as four members of this Court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong ((1976) 136 CLR 248 at 257 per Barwick CJ, Gibbs, Stephen and Mason JJ:
‘The judge called upon to decide proceedings of that kind is not entitled to do what has been described as ‘palm tree justice’. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down.’
39. Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is ‘just and equitable’ to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that 79 of the Act must be applied keeping in mind that ‘[c]ommunity of ownership arising from marriage has no place in the common law’ (Hepworth v Hepworth (1963) 110 CLR 309 at 317 per Windeyer J). Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be ‘decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses’ (29). The question presented by s 79 is whether those rights and interests should be altered.
40. Thirdly, whether making a property settlement order is ‘just and equitable’ is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised ‘in accordance with legal principles, including the principles which the Act itself lays down’ (30). To conclude that making an order is ‘just and equitable’ only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.”
(Emphasis added)
It is necessary for the Court, at the outset, to consider whether it is in fact "just and equitable" to make an order under section 79. In paragraph 42 of the decision in Stanford v Stanford , the High Court stated:-
“42. In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).”
Is it just and equitable that an Order be made under s.79?
In the present case, the husband and the wife have been separated for more than nine years. The parties have been divorced for 6 years. The existing legal and equitable interests of the parties to the marriage remain intertwined in respect of the property of the parties. It is just and equitable that an order be made under section 79. Both of the parties in the present case seek that the Court make property adjustment orders under section 79. The parties seek vastly different outcomes. Whilst it is the case that the husband seeks that there be no further property adjustment in favour of the wife pursuant to section 79 – the husband does seek that the wife forgo any interest or entitlement in the Talford Property Trust. Paragraph 3 of the draft orders sought on behalf of the husband (contained in the written submissions filed 20 December 2019 – paragraph 5) asks the Court to make an order (or a declaration) that:-
“(3). The Wife no longer has any financial or other interest in the Talford Property Trust and the trustee thereof is ordered to amend the trust deed as necessary to remove the wife as a beneficiary."
I have already outlined in broad terms the orders sought by the wife.
I have already made reference to some aspects of the Talford Property Trust. It is, however, necessary to refer further to the Trust – especially in relation to the control of the Trust and the manner in which the husband has managed and utilised the Trust – in particular the property of the Trust. I will return to this topic later in these Reasons.
The husband maintains that the parties made three oral agreements
In the husband’s trial affidavit filed 28 August 2019 he provides the following evidence concerning "three oral agreements" which he maintains were made between the husband and the wife. I note the following evidence from the husband in his trial affidavit:-
“52. After separation we made three oral agreements between ourselves ("the Property Settlement Agreement"):
(a) N Street, Suburb O Property Agreement - The Wife agreed to accept a larger share from the sale of the N Street, Suburb O property as a contribution to any future property settlement in respect of the property pool.
(b) Talford Property Trust Agreement - The Wife agreed to accept monthly distributions payments from the Trust in lieu of any claim over the assets of the TRUST.
(c) D Services Agreement - The Wife agreed that the Husband receive the business as part of the Property Settlement Agreement.
53. The detail of the N Street, Suburb O Property Agreement was as follows:
(a) The N Street, Suburb O property would be sold and no longer form part of the property pool.
(b) From the net proceeds of sale the Wife would receive approximately $400,000.00.
(c) Any extra paid to the Wife above 50% of the net proceeds would be debited to her account in any future property settlement.
54. The N Street, Suburb O Property Agreement was concluded as follows :
(a) Sale Price…………………... $535,000.00
(b) Net proceeds from the sale of the N Street, Suburb O property – $418,517.86
(c) Wife's entitlement (50% of net proceeds) – $209,258.95
(d) Amount paid to Wife from net proceeds – $394,940.00
(e) The Trust received – $23,577.86
(f) The remainder went to discharge the mortgage and other adjustments;
(g) I did not personally receive any of the net proceeds.
The N Street, Suburb O Property Agreement has resulted in an overpayment to the Wife to be debited in property pool as agreed.
Annexed hereto and marked "-3" is a true Porta Lawyers file copy of the letter dated 6 February 2013, Contract, Settlement Statement and cheques drawn.
55. The Talford Property Trust Agreement which essentially held the property at J Street, Suburb G as its only asset, was as follows:
(a) The Husband would pay the Wife in the form of trust distributions an amount of $770.00 per week after tax until such time as the property settlement could be finalised;
(b) The Husband would pay the Wife’s tax liability on these amounts;
(c) The sum of these payments would be debited to her account in any future property settlement.”
At the outset I note that on the one hand the husband refers to “the Property Settlement Agreement”. He says that this comprised three different oral agreements. The husband’s own evidence in paragraph 52 of his trial affidavit – is internally inconsistent. At the beginning of the paragraph, he refers to, “the Property Settlement Agreement”. But in 52(a) in relation to the “N Street, Suburb O Property Agreement” he talks about the wife agreeing to accept a larger share from the sale of that property – “as a contribution to any future property settlement…” That evidence clearly contemplates a future agreement or a future settlement. It is not evidence which indicates that the parties had reached any concluded agreement. As has already been noted – I accept the wife’s evidence in relation to the sale of the N Street, Suburb O property. I accept her evidence that the husband dictated to her that the N Street, Suburb O property would be sold and that she would receive the largest proportion of the sale proceeds. This enabled the wife to acquire a property in which to live. In the current pool of property, the net sale proceeds of the N Street, Suburb O home are now essentially represented by the wife’s unit at R Street, Suburb S.
The husband maintained in paragraph 54(g) of his trial affidavit that in relation to the “N Street, Suburb O Property Agreement”:-
“54(g). I did not personally receive any of the net proceeds.”
The husband maintained this position under cross examination – at least initially. I note page 100 from the transcript (Day 2 – 3 September 2019) from line 11:-
“MS LAYLEE: Did you receive anything from the sale of the N Street, Suburb O Street property?
MR TALFORD: Personally, no.”
Annexure -12 to the trial affidavit of the husband contains some of the bank statements on behalf of the Trust. On 24 January 2013 a deposit was made into the Trust's bank account in a sum of $23,577.86. This is the bank account with the number ending ...99. Less than two weeks later that same sum ($23,577.86) was transferred from the bank account of the Trust and was paid to the husband's personal account (#...49). The Trust bank statement itself includes the words “house settlement”. The bank account of the Trust indicates clearly that the money was transferred to the husband's personal bank account in respect of the “house settlement”. This is one example of the husband's deficient memory.
In an unusual and unorthodox move the husband filed an affidavit on 16 July 2020 in which he said that the wife’s written submissions dated 6 July 2020 had raised certain queries in relation to several entries in bank statements. The husband filed and served the affidavit. If there had been a submission to exclude the affidavit I would have excluded it. Rather than make a submission that the Court should exclude the affidavit – the wife’s counsel in fact made a submission in reliance upon the affidavit. The wife's counsel referred paragraph 7 (c)(i) of the husband's affidavit filed 16 July 2020 to confirm what had already been proven by the wife's side – namely that the husband had received $23,577.86 from the sale of the N Street, Suburb O property. In paragraph 7(d) of the 16 July 2020 affidavit, the husband maintained:-
“7(d). As previously disclosed in my affidavit and oral evidence, the N Street, Suburb O property settlement component was used to meet the Talford Property Trust mortgage."
The evidence from the transcript to which I have already referred indicated that the husband did not in fact remember receiving any money from the N Street, Suburb O property settlement personally. In any event, noting the husband's poor memory – in the absence of documentary evidence (for instance a clear and direct reference by the husband to a bank statement from the Trust mortgage account to prove that the sum in question had been deposited) – I am not prepared to accept the above evidence (7(d)) from the husband. My view in that regard is strengthened by other aspects of the husband's oral testimony on 3 September 2019. The husband’s personal bank account ending in #...99 – was in fact a T Bank account (note page 101 of the transcript from 3 September 2019 from line 35). The husband did not disclose that bank statement to the wife. This was put to him by Ms Laylee, counsel for the wife. At page 102 of the transcript, line 6, the husband indicated that he could not remember whether or not disclosure had been made in respect of that bank account. The husband then gave the following evidence in answer to some questions from the Bench:
“HIS HONOUR: And now what Ms Laylee has drawn to your attention is the fact that $23,577.86 was deposited or moved from the trust bank account to a bank account in your own name, you understand that?
MR TALFORD: Yes. Yes
HIS HONOUR: And what she’s implying when she puts to you that you didn’t disclose it is that you didn’t – is that you weren’t being open about it. That’s really what she’s saying to you?
MR TALFORD: Okay. Well, that particular account was a holding account for long service leave for my staff. That money went into that account and came out later on to help pay my wife’s lump sum tax amount.”
To begin with the husband did not remember that the $23,577.86 went into an account in his own name. When it was drawn to his attention (by counsel for the wife) that it did in fact go into his T Bank account (#...49), Mr Talford told the Court, “That money went into that account and came out later on to help pay my wife’s lump sum tax amount.” This evidence from the husband on 3 September 2019 is completely different to the evidence he gave in paragraph 7 (d) of his affidavit that was filed on 16 July 2020.
Even if I'm wrong about that it will make no difference one way or the other. If the husband in fact paid all that money ($23,577.86) into the mortgage account for the J Street, Suburb G property then the figure itself is represented in the pool of assets by the value of the J Street, Suburb G property. Given the size of the pool the amount in question will not make any material difference to the outcome of the case. The husband’s evidence was contradictory. He does not really remember what happened in relation to the sum of $23,577.86 – but that does not stop him from giving various explanations to the Court as to what happened to that money. The evidence to which I have referred highlights the husband's poor memory. This is crucial in a case such as the present because the husband maintains that certain oral agreements were reached between himself and the wife. It will be apparent from these Reasons that I prefer the wife’s evidence in any situation where there is a conflict between the husband's versions of events and the wife’s version of events.
Paragraph 55 of his trial affidavit makes it abundantly clear that the husband considers the assets of the Trust to be his own assets. The evidence in paragraph 55 puts this issue beyond doubt. The husband himself states that the agreement was to the effect that:-
“(a) The husband would pay the wife in the form of Trust distributions…” (Emphasis added)
The husband does not say that “the Trust” would pay to the wife in the form of distributions. He refers to himself.
This confirms the conclusion I have reached in relation to the assets of the Trust. The husband controls the Trust. The husband has, at all times, treated the assets of the Trust as his own assets and he has caused payments to be made from the bank account in the name of the Trust accordingly. Those payments have been made to the wife and to the husband himself and for his benefit.
The next item of evidence which is relevant is contained in paragraph 59 of the husband's trial affidavit – that paragraph states:-
“59. As shown in Paragraphs 56, 57 and the Trust Bank Statements in "-12" the total payments to the Wife from 4 July 2012 to 20 February 2019 from the Trust, including tax paid on behalf of the Wife by the Trust is $317,444.72 These This was agreed to be credited against any payment calculated to be owing by the Husband to the Wife in any property settlement.”
Despite the grammatical errors – I note the words “this was agreed to be credited against any payment calculated to be owing by the husband to the wife in any property settlement.” Again, the husband uses the words “in any property settlement”. The wording itself is not indicative of a concluded property settlement agreement – but contemplates that there may be one in the future. Further, the husband was referring to the sum of $317,444.72, which had been paid either directly to the wife or to the Australian Taxation Office on behalf of the wife. Those payments were in fact distributions from the Trust to the wife paid at the rate $770 per week between July 2012 and February 2019.
The words in italics in the last preceding paragraph (coming as they do from the last lines of paragraph 59 of the husband's trial affidavit) are different words to the words the husband alleged in paragraph 55(c). In paragraph 55(c) husband’s evidence is that it had been agreed between the parties that, “55(c) The sum of these payments would be debited to her account in any future property settlement”.
In paragraph 59 of his trial affidavit, the husband said that the agreement between the parties was that the sums to be paid to the wife would:-
“be credited against any payment calculated to be owing by the husband to the wife in any property settlement.”
Herein lies the problem for a party alleging an oral agreement concerning an adjustment of interests in the property of the parties to the marriage following a marriage breakdown. I have come to the conclusion that the husband does not actually remember what was said. There is no contemporaneous document of sufficient clarity to assist the husband's argument.
This variation in the husband’s evidence is not surprising noting his deficient memory as referred to earlier in these Reasons. Indeed, to be fair to the husband he essentially admits his lack of memory. In relation to the circumstances of the property settlement agreement as contended by the husband he states at paragraph 65 of his trial affidavit:-
“65. A further part of those preliminary discussions was that I would commence making payments to the Wife commencing from 4 July 2012 as part of a property settlement arrangement. I do not remember the exact circumstances and exact details of these conversations, however they were later formalised on 16 December 2012 as deposed below.”
I do not know whether the wife received any payments from the husband between the date of separation (14 November 2011) and the date of the first distribution from the Trust in July 2012. I note that the sale of the N Street, Suburb O property did not settle until January 2013 and I also know that the wife had no significant income from any other source.
In any event, the husband maintains that there was some preliminary discussions between himself and the wife between 14 November 2011 and 1 January 2012 in relation to the division of assets. I can only imagine what form of conversation took place between the parties on the date of separation – 14 November 2011. The wife's evidence is that the husband’s announcement of a separation came out of the blue. The husband's evidence is that from 14 November 2011 – he and the wife were discussing the division of assets. So the husband’s evidence is that on the very day when he announced to his wife of 34 years that he wished to separate – an announcement which came as a shock to the wife – the husband commenced discussing the division of assets. These parties were on completely different wavelengths. There is a significant amount of evidence to support this conclusion.
Notwithstanding the fact that the husband had commenced to cause the Trust to make distributions on a weekly basis to the wife from 4 July 2012 – he essentially maintains that the terms of the agreement reached were not actually "formalised" (the husband’s trial affidavit paragraph 65) until 16 December 2012. Even on the husband's own case, the payments commenced more than five months before the agreement was "formalised". The use of the term "formalised” is misleading. Even if the husband's case were to be accepted, there was nothing formal about the agreement alleged. At its highest the husband's case indicates an informal oral arrangement.
The husband then goes on to provide the following evidence in his trial affidavit:-
“66. On 16 December 2012 the Wife and I met at the N Street, Suburb O property.
67. This was the day that the Wife signed the PAMD Form 22a to appoint the agent to sell the N Street, Suburb O property.
Annexed hereto and marked "-5" are true copies of the Historical Business Name Search and Form 4 Transfer of Business Name.
68. At the meeting the Wife and I sat at the brick niche (window) between the dining room and the lounge room table and I confirmed to the Wife the property settlement agreement we reached post separation.
69. At the meeting, before she signed the Form 22a appointing the agent, I told the Wife that because of my age I would not likely be able to borrow the money to pay her for her share of the J Street, Suburb G property.
70. Instead of paying the Wife a single lump sum for her share of the J Street, Suburb G property I proposed the following:
(a) Payment to the Wife from the proceeds of the N Street, Suburb O property in the amount of about $400,000.00.
(b) Payment in the amount of $40,000.00 per year from the Trust.
(c) Payment of the $40,000.00 per year from the Trust to be made on a fortnightly direct to her bank account.
(d) In the future when more funds became available to me, any difference in her share of the J Street, Suburb G property outstanding, to be reconciled at that future time.
71. The Wife made a counter offer before she signed the PAMD Form 22a, stating that she wanted the yearly payment to her from the Trust in the amount of $40,000.00 to be ‘after tax.’
72. I agreed to the Wife's counter offer and replied words to the effect ‘Ok.’
73. After I agreed to the Wife's counter offer, she signed the PAMD Form 22a appointing the agent to sell the N Street, Suburb O property.
74. In the years following the Property Settlement Agreement I relied on the Wife's counter offer and our verbal agreement and from the Trust I caused the Wife to be paid the yearly amounts as stated elsewhere in this Affidavit.
75. In the years following the Property Settlement Agreement I also caused the Wife's tax liability from the Trust payments to be paid in accordance with the terms of our verbal agreement for the years 2015, 2016, 2017 and 2018 as stated elsewhere in this Affidavit.
76. On numerous occasions in my email correspondence to the Wife following the Property settlement Agreement I confirmed the agreement and that I would attempt to have the verbal agreement formalised in a Binding Financial Agreement (‘BFA’).
77. On 9 January 2013, about three weeks after we agreed to the Property Settlement Agreement I emailed the Wife and stated:
‘Will get my finger out on the BF A, it's simple as we have divided up the goods already.’
Annexed hereto and marked ‘-6’ is a true copy of my email dated 9 January 2013.”
The wife denies the husband's contention that an agreement was reached between them as claimed by the husband. I note paragraphs 14 and 15 of an affidavit filed by the wife on 15 August 2019. In those paragraphs, the wife states:-
“14. Paragraphs 52-55 and 60 - 82:- I deny there was ever such agreement as claimed by the Husband.
15. In line with his authoritarian and controlling conduct over the 35 years of our marriage, the Husband told me what he was going to do with the sale proceeds of the house. What he told me was that he was going to give me the bulk of the money for the house so I could go off and buy another house in exchange for me transferring the business (D Services) into his name. That business was still in my sole name by reason of the Husband previously working at Employer B (as mentioned elsewhere), he was unable to have income from secondary employment.”
In paragraph 14 of the above stated affidavit the wife is referring to the husband's trial affidavit (filed 28 August 2019). The wife’s lawyers must have been given a copy of the husband’s trial affidavit before it was actually filed.
The email correspondence which is in evidence supports the wife's position that there had never been any concluded agreement in relation to the property settlement – in particular in relation to the J Street, Suburb G property. These emails were all tendered into evidence by the wife.
Exhibit 2 is an email from the husband (D Services) to the wife (Ms Landry) dated 22 July 2015. It was sent at 3:35pm. The subject is, "BFA". The email states:-
“Hello from the ex.
Finally my arse is out of the trap and I can start the BFA. I've found a site with a kit, bit like the divorce, and even the solicitor interaction is by remote control and emails. Think you can sign at a JP as well. You get the certificates as well.
Have a look at (website) I have bought the templates and will start to draft things up, sending you a copy as I go.
Hope your keeping out of trouble, and say hi to your mum for me.
Regards
Mr Talford”
The next email which is in evidence was sent from the husband to the wife on 24 April 2016 at 10:45am. It forms part of exhibit 4. In that email the husband wrote:-
“Hi from Mr Talford.
Did you have a look at the property settlement info?
Also I have been looking for my birth certificate and no luck. Did it go back to you in error after the divorce application?
Regards
Mr Talford.”
The words used by the husband in his email dated 24 April 2016 (sent by D Services) again supports the wife’s case that there was no concluded property settlement. If there was a concluded property settlement why would the husband be asking the wife whether she had had "a look at the property settlement info?"
The wife responded on 3 May 2016 at 10:35am. This is also contained as part of Exhibit 4. At that time, the wife wrote to the husband:-
“Hey there,
Sorry I don't have your birth certificate. What property settlement paperwork. The only "paperwork" I've seen are those forms you emailed on 2/2/16. What are you talking about re the trust and title, and buying my plt's the first I've heard of that”
The husband must have mentioned (possibly in an email dated 2 February 2016 which is not in evidence) the J Street, Suburb G property and the Trust and the title to the J Street, Suburb G property. The wife on 3 May 2016 asks the question:-
“What are you talking about re the trust and title, and buying my plt’s the first I've heard of that”
The wife had accidentally hit the send button before concluding that email at 10:35am on 3 May 2016. Five minutes later – at 10:40am on 3 May 2016 the wife sent the conclusion to that email. It is contained in exhibit 5. In that further email (at 10:40am) the wife stated:-
“Cont. Hit send by accident . What do you mean you're paying me for my part of the shed? That is not what we have been speaking about.
Ms Landry.”
Exhibit 5 goes on with an email from 11 May 2016 from the husband to the wife sent at 2:36pm. In that email the husband states:-
“Back again from Mr Talford.
I now have a few dollars to pay for a BFA.
The words I have always used are property settlement or BFA. I have not been paying a spousal maint allowance.
When we split, the bulk of the house dollars went to pay you for your share of the business. At that time I stated I'm too old to raise the dollars to pay for your share of the building in a lump sum so it will have to be taken in payments from the trust. Clear title is also needed to prevent any claim should you pass before me.
It is to your benefit. If l pass first then spousal payments terminate. If you are paid from rent gained from the shed it continues even if I am gone. In exchange your share of the shed goes to the kids.
Without clear title I am unable to operate the trust to the max benefit for both of us.
I really don't care about your details, they can stay in a sealed envelope, but must be submitted for the BFA to be valid. I think it is the same for Consent orders as well.
Regards
Mr Talford”
The wife responded eight days later on 19 May 2016 at 1:29pm. This is also contained in exhibit 5. The wife stated in that email:-
“Now I see why I've been so confused. When you spoke of property, I believed you were talking about the house, furniture and my car. Never once have you mentioned anything about buying my half of the building, and don't insult my intelligence by saying you have. If you had, that is what I would have been telling people. Last thing that you said was that you were paying me rent. At least that is what you were calling it for tax purposes. If I let you take my name off the title and something happens to you, what is to stop the kids selling the building and leaving me high and dry? Which because of the lies they have been told, is quite on the cards. I will put it in my will that the children get my share of the building.
Your reference to" my share of the business" is a little off the mark too. It was registered as a sole trader and you got it for a pittance.
Congratulations on your upcoming nuptials (if they haven't already happened). I just hope you treat her better than you did me.”
On 24 May 2016 at 11:46am D Services (the husband) emailed the wife (Ms Landry) (exhibit 5). The email states:-
“Hi from Mr Talford.
I have always spoken about freeing the title of the building to ensure it goes to the kids. When we last spoke about it before Christmas you said it was not necessary as Mr X would not make a claim. Without clear title I can't get an overdraft for the business and 2 banks have refused me finance for a house.
Over 15 years the money you receive adds up to over $800,000.00 and is easily adequate compensation. Leaving a provision in your will is not a certain thing as it can be challenged.
Part of a BFA would be a condition that payments to you continue after the business ceases to trade or I cark it and they come out of rent received.
At 61 years of age I don't have much time left to buy somewhere to live and having to rent after retirement would make it impossible to continue your payments.
If you wish we can apply for consent orders but the lawyers won't leave much for us. With a BFA it will be done quicker and I can pay.
Here from you when you can.
Mr Talford”
On 30 June 2016 at 10:53pm the wife emailed the husband the following email:-
“Morning Mr Talford,
I've received your email and have read through them, and they are very nice legal waffle, but I still haven't seen anything in regards to what you expect me to agree to, which is what I've been asking for. You told me ages ago that you had a draft, and that is all I need at the moment, even if it's just a bullet point list. So if you could get that to me as soon as possible, I would appreciate it.
Cheers Ms Landry.”
The conclusion I have reached is that the events were neatly summarised by the wife in paragraph 22 of her affidavit filed 15 August 2019. In that paragraph the wife stated that:-
“22. I have attempted to reproduce all emails between the Husband and I since July 2013 through to June, 2017. Nowhere in those emails do the Husband and I speak to each other in terms of any agreement regarding the J Street, Suburb G warehouse. In fact to the contrary on a number of occasions I queried the Husband about exactly what he wanted in respect of an agreement regarding the J Street, Suburb G warehouse.”
I accept the wife’s version of events. The wife, both on 3 May 2016 and 19 May 2016, made it abundantly clear in writing to the husband that he had not mentioned to her anything about buying her half of the building – i.e. the J Street, Suburb G property. The husband's memory is deficient. I have already made reference to this finding. Where there are any discrepancies between the versions provided by the husband and the wife – I accept the evidence of the wife. It is also worth noting that as early as May 2016, the wife made her position clear. There was no agreement in respect of the J Street, Suburb G property. The husband continued to cause distributions to be paid to the wife from the Trust. This continued for a further period of 2 years and nine months (until February 2019). If the husband was certain about the existence of a concluded agreement in respect of the J Street, Suburb G property – he would have surely taken issue with the wife’s emails; ceased the distributions to the wife and brought the matter to the Court. He did nothing of the sort.
It is worth noting that the email from the husband to the wife on 11 May 2016 at 2:36pm is contradictory in relation to one important aspect. The husband stated on the third line, "I have not been paying a spousal maint allowance". Later in the email he is again talking about the distributions from the Trust to the wife and says "if I passed first, then spousal payments terminate". So in the one email the husband denies that he's been paying the wife spousal maintenance (in fact, causing the Trust to make distributions to the wife) but later in the same email he refers to the distributions as “spousal payments”.
That confusion in terminology evidenced by the husband's email of 11 May 2016 is relevant because it shows the lack of clarity so far as the husband and his evidence are concerned.
On the husband's own evidence there is no consistency, certainty or clarity. Certainty and clarity are essential for the Court to conclude that there was an agreement. I note what was stated by Menzies J in Thorby v Goldberg (1964) 112 CLR 597 at 607. Menzies J stated:-
“I do not think the law to be applied is in any doubt and I agree with and will apply the following statement of that law from the dissenting judgment of Sugerman J. He said:-
‘It is a first principle of the law of contracts that there can be no binding and enforceable obligation unless the terms of the bargain, or at least its essential or critical terms, have been agreed upon. So, there is no concluded contract where an essential or critical term is expressly left to be settled by future agreement of the parties. Again, there is no binding contract where the language used is so obscure and incapable of any precise or definite meaning that the court is unable to attribute to the parties any particular contractual intention’.”
The critical term in issue in the current case is the question of the J Street, Suburb G property and the distributions to the wife from the Trust from 2012 until 2019. I accept the evidence of the wife and I agree with the submissions made on behalf of the wife that there was no agreement between the parties concerning what would happen with the J Street, Suburb G property and there was no agreement between the parties as to the precise characterisation of the distributions that were made from the Trust to the wife between 2012 and 2019. The wife says that the husband had told her that he was paying her rent (note exhibit 5 – the wife’s email of 19 May 2016). It will be apparent that I accept this evidence from the wife. It is worth noting that the payments do very much have the appearance of “spousal maintenance”. At one point the husband referred to the distributions as “spousal payments” (exhibit 5 – husband email dated 11 May 2016) but in the same email (as noted) the husband disavowed the concept of “spousal maintenance”. It is not necessary for me to make a particular finding one way or the other in respect of that issue. The wife says that the husband told her he was paying her “rent” and I accept the wife’s evidence that she did not want to query the husband too much in relation to the payments from the Trust – because she was concerned that the husband would stop those distributions. Her concerns were justified when the husband did in fact cease making distributions to the wife from the Trust in February 2019 after the unsuccessful mediation.
In “The Laws of Australia – Contract: General Principles” [1] – the learned author stated at paragraph [7.1 .380], inter alia:-
“Of necessity, a court can do no more than infer agreement from the words and conduct of the parties - from the external manifestations of assent (Taylor v Johnson (1983) 151 CLR 422).'The yardstick for applying the objective test of agreement is that of the reasonable or intelligent bystander (Oscar Chess Ltd v Williams [1957] l WLR 370). The vital question is whether or not a reasonable bystander would construe agreement from the parties' statements, conduct, and other relevant circumstances of the particular case. In sum, and where the traditional offer and acceptance analysis applies, the answer to that question depends on two others: has one party made a firm promise to be legally bound on ascertained or ascertainable terms which can be accepted as they stand, that is, has an offer been made; and has that offer been unconditionally assented to by the offeree, that is, has there been an acceptance.”
[1] J.L.R Davis: Emeritus Professor of Law, Australian National University. Thomson Law Book Company published 2006.
This is the sort of case where the "traditional offer and acceptance analysis" is applicable. Even on the husband's case it cannot be said that he made “a firm promise to be legally bound – on ascertained or ascertainable terms which can be accepted as they stand”. Even on the husband's case the terms were not ascertained or ascertainable. For how many years was the husband to pay the wife (in accordance with his version of the events)? What was the valuation to be relied upon in respect of the J Street, Suburb G property? Even on the husband's own case, there was not an offer that had been made on terms which could "be accepted as they stand".
Furthermore, even if an offer had been made which conforms to the above-mentioned principles (which I do not accept) – it cannot be said that the wife "unconditionally assented" to the offer. That is, it cannot be said that there was any acceptance (note Taylor v Johnson (1983) 151 CLR 422 and Oscar Chess Ltd v Williams [1957] l WLR 370). At paragraph 10 of the husband’s written submissions filed 20 December 2019 it is stated that:-
“10. At [JS-XEX-Tl-P33-12] the Wife gave evidence that it was that payments to her would be made from the trust as part of a property settlement arrangement.”
The written submission makes it clear that the reference is to the wife’s oral testimony from day one of the trial (2 September 2019) at page 33 of the transcript, line 12. The submission put forward on behalf of the husband is wrong. In fact, at line 12 on page 33 of the transcript of 2 September 2019 there appears the following question and answer:-
“MR WILSON: Would you agree that your ex-husband agreed to make payments to you from 4 July 2012 from the trust?
MS LANDRY: From the trust, yes. That’s what he said.”
What actually appears (by way of evidence) on page 33 of the transcript is not the same as the written submission at paragraph 10. The wife did not give evidence that, "payments to her would be made from the trust as part of a property settlement arrangement." The submission misstates the evidence.
In paragraph 26 of the husband's written submissions filed 20 December 2019 I note the following written submission:-
’26. The trial evidence in support of the Talford Property Trust Agreement is as follows:
(a) The Wife agreed there had been a property settlement with respect to the division of the value of the Talford Property Trust property at J Street, Suburb G – “...the settlement was never finalised” [W1-11]. In oral evidence the Wife stated that "I guess it was unfinalised. Yes." [...40]…”
As to the first part of the submission in 26(a) it is said that "the wife agreed that there had been a property settlement with respect to the division of the value of the Talford Property Trust property at J Street, Suburb G”. A reference is made to the wife’s trial affidavit (filed 2 August 2019) at paragraph 11. Paragraph 11 of the wife’s trial affidavit actually states:-
“11. Our separation has been unremarkable, save and except that we were divorced on 8 June 2014 and until these proceedings, neither of us had sought a formal property division. The Husband asserts that he we had an informal property settlement - however the settlement was never finalised.”
Paragraph 11 of the wife’s trial affidavit is not evidence of the wife agreeing that there had been a property settlement with respect to the division of the value of the Talford Property Trust property at J Street, Suburb G. In the last sentence of paragraph 11 the wife is stating what the husband is asserting – i.e. the husband was asserting that the parties “had an informal property settlement – however the settlement was never finalised.” The husband would have the Court interpret the paragraph in question (paragraph 11) as evidence that the wife agreed that there is in existence a so-called Talford Property Trust agreement. At no stage has the wife agreed to such a proposition. Further, there is a reference to the wife's oral testimony on day one of the hearing (transcript 2 September 2019), page 15, line 40. This is where Counsel for the husband cross examined the wife in relation to paragraph 11 of the trial affidavit and after reading out to the wife the last sentence of paragraph 11 counsel then asked the following questions:-
“MR WILSON: So you agree that you had an unfinalised settlement?
MS LANDRY: I guess it was unfinalised. Yes.
MR WILSON: But it was a settlement?
MS LANDRY: Well, it wasn’t settled.
MR WILSON: But it was an agreement to settle that never turned out to get finalised, but there was an agreement to settle there?
MS LANDRY: Well, he had promised to – to get a BFA done from –
right from the beginning and I’ve been waiting for the BFA to be done and find out what the heck is going on.
MR WILSON: He had sent you forms for the BFA over time?
MS LANDRY: He sent some forms that, to my reading of them, didn’t have any bearing on a BFA at all. One appeared more to be a pre-nup settlement and the other one was just a – a list of assets and – and, you know, like a blank form with assets and things on it.
MR WILSON: So I suggest to you that the husband was outlining to you what the unfinalised agreement was?
MS LANDRY: But he never sent me what he wanted me to agree to. I asked him in one email to just send me what he proposed even if it was a bullet point thing just list what he wanted done and I never saw anything.”
It is not correct for the husband to submit (in paragraph 26(a)) that the references to the evidence contained in 26(a) of his submissions are evidence "in support of the Talford Property Trust agreement". In fact, the wife goes so far as to say (at line 10 on page 16 of the transcript on 2 September 2019) "but he never sent me what he wanted me to agree to".
In paragraph number 26 of the husband's written submissions there are several references to pages 14 and 15 of the transcript of day one of the proceedings. None of the actual evidence contained on pages 14 or 15 of the transcript supports the husband's proposition that the wife "agreed" as to the existence of the so-called Talford Property Trust agreement. For instance, on page 14, I note the following question and answer from line 25:
“MR WILSON: But can I suggest to you that your ex-husband’s reason for saying that they will continue was on the basis they would continue until an equal division of the property settlement had been made?
MS LANDRY: And it’s not – wasn’t my understanding. I just – it was a dividend or disbursement from the trust and that’s what I was told. After I was told it was rent, I was told it was a disbursement for trust…”
I note the written submissions of the husband contained in paragraphs 27(d) and (e). In those submissions the husband states:-
“(d) The Wife agreed that the Husband said in 2012 as part of the discussions regarding the Talford Property Trust property "I'm too old to raise dollars to pay you for your share of the building in a lump sum." [...4];
(e) The Wife agreed that the Husband also said in 2012 "It will have to be taken in payments from the trust'' [...8];…”
The husband's written submission asserts that "the wife agreed that the husband said in 2012” certain things. A reference is then made to the transcript of day two (3 September 2019 at page 58). The written submission is misleading. It misstates the evidence. It is necessary to read from page 54 of the transcript. When one reads from page 54 of the transcript, it is apparent that the wife did not agree that in 2012 the husband stated those words (contained in quotation marks in paragraphs 27(d) and (e) of the written submission). I note page 55 of the transcript from line 39:-
“MR WILSON: Do you recall him saying that he would give you regular payments for the shed?
MS LANDRY: ‑‑‑Give me regular payments. Yes. Not – I don’t remember ‑ ‑ ‑
MR WILSON: For the shed?‑‑‑ ‑ ‑ ‑
MS LANDRY:…him saying it was for the shed. No.”
The counsel for the husband was cross-examining the wife in relation to an email sent from the husband to the wife on 11 May 2016 where the husband stated:-
“When we split, the bulk of the house dollars went to pay you for your share of the business. At that time I stated I'm too old to raise the dollars to pay for your share of the building in a lump sum so will have to be taken in payment from the trust."
That email is included as part of a chain of emails which form exhibit 5 in these proceedings. The cross examination then became somewhat muddled. It was unclear as to whether or not the questioning by counsel related to the words contained in the 2016 email or whether the questioning from counsel related to conversations which the husband alleged had occurred in 2012. I note at page 59 of the transcript where I commented on this very point stating:-
“HIS HONOUR: Well Mr Wilson I’m not satisfied that she has yet agreed that these things were said in 2012 the way you've been asking the question."
My view in this regard is confirmed by the further evidence given later on page 59 on day two of the transcript where from line 44 the following questions and answers occur:-
“MR WILSON:
When we split that the payments for the shed will have to be taken in payments from the trust.
I asked you a question. I think you agreed with me that he said that at that time?
MS LANDRY: At that – what, in 2012?
MR WILSON: Yes?
MS LANDRY: No. The shed wasn’t really – didn’t really come up. There was the business, the house and the contents that we spoke about and that we – we divided up. I got the bulk of the money from the house. He got the business and then there was the shed left and I had actually completely forgotten about it.”
It is not correct for the husband to include in the written submission in paragraphs 27(d) and (e) that "the wife agreed that the husband said in 2012…”. The wife did not agree under cross examination as asserted in the husband's' written submissions.
I have also considered the possibility that an agreement could be inferred from the conduct of the parties. It seems clear enough that the wife accepts that the N Street, Suburb O property was to be sold and she was to be given the lion’s share of the sale proceeds so that she could purchase a dwelling. The wife says this was as dictated to her by the husband, and she went along with that approach. She had no alternative of course because she did not have access to any other capital or income. In any event, the wife agrees that the husband was to retain the business (D Services). As noted already, the main item of contention remains whether they had in fact reached a concluded agreement in relation to the totality of the property settlement between them – hinged as it was on the fate of the J Street, Suburb G property.
I note and accept the following evidence from the wife from her affidavit filed 1 April 2018:-
“40. Generally, until recently I have had little or no knowledge and understanding of the finances of the Trust (or the Business).
41. The general reason for this is that since Separation the Husband has paid me a weekly distribution (my only income) from the Trust and I was concerned that if I questioned or challenged the Husband there would be major disputation between us including that he might cease the payments to me.
42. Presently the weekly sum I receive from the Trust is $770.00 net. This amount has always been decided by the Husband.
43. I was under the impression that the Husband had caused Mr U to do my tax returns and I have never been required to attend to same, pay the relevant tax or meet any other obligation.
44. Late last year I became concerned that the Husband might not be going fulfil his representations to me to finalize a property settlement with me and I wanted to understand our finances.
45. In or about September, 2017 I discovered to my horror that none of my tax returns had been lodged by the Husband's account. I enlisted the help of an independent accountant (Ms V from W Accountants) who provided me with financial advice….”
The conduct of the parties in this case is just as consistent with the wife’s version of events – namely she had no job and she had no income so that after the time of separation the husband (as one of the trustees) caused a distribution to be made to the wife of $770 per week. The husband told the wife that the payment to her would be considered as “rent” – at least that is what the husband was calling it “for tax purposes”. The husband is undoubtedly confused as to who actually owns the J Street, Suburb G property. He is confused as to who has the legal entitlement to that property. He has acted at all times as though it is in fact solely his own property. Whereas in fact the J Street, Suburb G property was purchased by the Trust when the parties were together. The wherewithal to complete the purchase came about because the parties, who had been married for 28 years by the time of the purchase of the J Street, Suburb G property – had built up together through direct and indirect contributions – the property and resources of the parties of the marriage. Together, these included the former matrimonial home and the business (D Services). The only income received by the Trust is rental income. That income would be available for distribution to the beneficiaries, whether or not D Services was renting the property – or whether another tenant was renting the property from the Trust. The distributions from the Trust (following separation) to the wife (and indeed to the husband) are consistent with the conclusion that they were both entitled to share the benefit of the fruits of their labours throughout the course of their 34 year marriage. This is, in essence, the wife’s argument and I agree that it is correct. It simply does not follow that because the husband caused distributions to be made from the Trust to the wife between 2012 and 2019 that it necessarily means that a concluded agreement in the terms he maintains had been reached between the parties. On a proper analysis of the evidence – the submission made on behalf of the wife is the correct submission. The conclusions argued for on behalf the wife are the correct conclusions.
Much of the evidence in the case and the material prepared by the husband was geared towards his version that an agreement had been reached between the parties concerning all of their property. At best, even if the Court had been convinced that an agreement was in fact reached between the parties (which it is not) – it must be noted that such an agreement would not be binding and could only be considered as a guide or as part of the factual matrix in respect of this case. A financial agreement between the parties to a marriage is not binding upon this Court unless the requirements of Part IIIVA of the Family Law Act1975 are met. Section 90G of the Act sets out the circumstances which must exist for a financial agreement to be binding. It could not be clearer. It uses the words "if, and only if," before setting out the conditions which must exist for such an agreement to be binding on the parties. The husband, of course, has never maintained that there was a binding financial agreement. Indeed, the wife was always waiting upon the husband to "send through" (as it were) the draft binding financial agreement for her consideration. It never arrived.
Notwithstanding that the Court has concluded that there was no agreement in relation to the totality of the property of the parties to the marriage and, further, notwithstanding that there was no "binding financial agreement" it is nonetheless important for the Court to consider the authorities in relation to informal agreements between parties to a marriage. The Full Court of the Family Court in 2005 considered the situation where parties had entered into an informal agreement. In a decision entitled DW v GT (2005) 191 FLR 305, the Court (comprising Finn, May and O'Reilly, JJ) stated in paragraphs 38 – 40:-
“38. Where parties enter into an agreement concerning property, other than an agreement approved under the provisions of the Act or embodied in consent orders, and one party subsequently commences proceedings under s 79 for an alteration of property interests, the Court must determine the application on its merits having regard to the factors as set out in s 79(4) as they exist at the time of the hearing of the application under s 79 and according to the law in force at that time and not, as to either of those two matters, at the time the agreement was made. There is no threshold test, before embarking upon the s 79 exercise, to determine whether the earlier agreement was just and equitable at the time it was made according to the facts as they then existed and the law then in force. The earlier agreement should be considered (as an indication of what the parties may have regarded as just and equitable at the time), but its provisions only given effect if they coincide with an order which is just and equitable according to s 79 at the time of the hearing.
39. In determining s 79 applications in circumstances where there has been an earlier agreement, it will often be necessary to consider what was the value of the parties' assets at the time of the agreement, what their various contributions were to that time, and what might have been an appropriate s 75(2) adjustment. A consideration of these matters might well be necessary in order to provide a background to the parties' understanding of what was a just and equitable settlement at the time. However, and perhaps more significantly, it would generally be necessary for the Court to acquaint itself with changes in the composition and value of the property pool, so that post-separation contributions can be assessed.
40. In the present case therefore it may well have been necessary for the trial judge to consider these various matters existing at the time of the agreement. However it was also necessary for him to go further and to consider the composition and value of the assets and the various matters referred to in s 79(4) as they existed at the date of the hearing. The fact that he did not undertake this further exercise must lead to the conclusion that there is substance in ground 1(b).” (Emphasis added).
This matter was again considered by the Family Court in 2011. There is no doubt that the parties can reach financial agreements which are not binding financial agreements. I note what was stated by Strickland J in Senior v Anderson (2011) 250 FLR 444 at paragraphs 94 – 96:-
“94. The Act in effect draws a distinction between agreements which are financial agreements (ss 4, 90B, 90C, 90D) and those financial agreements which are binding (s 90G). Financial agreements can, like any other agreement, govern the actions of the parties to them and bind the parties to obligations, but do not oust the jurisdiction of the court. Parties to an agreement that satisfies the definition of “financial agreement” are bound by its terms (or not bound as the case may be), just as they would be bound (or not bound) by any other agreement (s 90KA) (see generally Australian Securities and Investment Corporation v Rich (2003) 31 Fam LR 667 ; (2003) FLC 93-171 ; [2003] FamCA 1114 (ASIC v Rich)).
95. Section 90G is irrelevant to the contractual rights and remedies of the parties to an agreement that satisfies the definition of “financial agreement”. That section only becomes relevant when the issue is whether an agreement that satisfies the definition of “financial agreement” is effective for a specific statutory purpose, namely to operate as a bar to claims by either party pursuant to Pt VIII of the Act: s 71A. It will be so, if and only if, it is “binding” within the meaning of s 90G.
96. If an agreement, including an agreement that satisfies the definition of “financial agreement” under the Act, fails to effectively bar Pt VIII claims (because of its failure to comply with the requirements of s 90G and, as a result, is not “binding” within the meaning of that section) the financial agreement can nevertheless have an affect. However, an agreement’s failure to be “binding” in the s 90G sense renders its use in Pt VIII proceedings to be very limited; specifically it does not operate as a bar to orders made under that Part: see for example Woodland and Todd (2005) 33 Fam LR 177 ; (2005) FLC 93-217 ; [2005] FamCA 161 at [37]–[39]”
Further, I note the analysis by Murphy J in Fevia v Carmel-Fevia (2009) FLC 93-411 His Honour stated from paragraph 119:-
“119. If the parties to a marriage (or parties to a prospective marriage) enter an agreement which otherwise meets the criteria for the formation of a valid and enforceable contract and which purports to determine how, in the event that their marriage breaks down, their financial affairs should be determined, the principles of contract (and equity) will determine the parties’ rights with respect to that contract. So much is clear, in my view, from s 90KA.
120. If an agreement purports by its terms to exclude the operation of Pt VIII of the Act in respect of the matters the subject of the agreement, there is potential for there to be a collision between the principles of contract and equity applicable to the contract and principles of family law arising under, and from, the Act. The potential for there to be a collision between those principles occurs, though, only where one of the contracting parties asserts that, despite the terms of the contract, the court may make orders pursuant to Pt VIII of the Act in respect of matters the subject of the agreement. In that event, the court can make orders if one or more of a number of matters can be established.
121. First, by reference to the principles of contract (or equity), there may, in fact, be no agreement between the parties (despite claims to the contrary by one of the parties). That there must be an agreement before there can be a “financial agreement” is made clear by the definition of “financial agreement” in s 4 of the Act. The ordinary and natural meaning of “agreement” is, in my view, an agreement which is otherwise effective and enforceable at law. That this meaning of “agreement” is contemplated by the Act is, in my view, underscored by ss 90K(1)(b) and 90KA.
122. Second, the court can make Pt VIII orders in the face of an agreement if, by reference to the Act, there is no “financial agreement”. These particular forms of agreement are creatures of the Act, provided for in the circumstances set out in ss 90B, 90C and 90D (relevantly s 90B). An agreement otherwise valid, effective and enforceable at common law may be a “financial agreement” for the purposes of the Act if the conditions of those sections, relevant to the circumstances (here s 90B) are met.
123. The relevant pre-conditions for an agreement otherwise valid and effective at law being a “financial agreement” for the purposes of the Act, are contained within (relevantly) s 90B. The section prescribes who may be parties to such an agreement (people who are contemplating entering into a marriage with each other“ and ”one or more other people); the form of agreement (it must be “a written agreement”) and the matters which must be the subject of the agreement (“the matters mentioned in [s 90B(2)”]. Further, the section excludes certain people from being parties to such an agreement (“spouse parties” who are parties to another agreement pursuant to ss 90B, 90C or 90D with respect to any of the specified matters).
124. Third, the court can make Pt VIII orders in the face of an agreement that is a “financial agreement” if conditions specified by the Act are met (s 90K) and the financial agreement is set aside by the court.
125. It will be appreciated that, in each of the situations just described, the court’s power to make Pt VIII orders occurs independently of the provisions of s 90G of the Act.
126. The court’s power to make orders arises in each case from factors connected with matters referable to contractual (or equitable) principles and/or the provisions of the Act independent of s 90G. Such a result emanates from the fact that if a contract is not “binding” within the meaning of s 90G it can, nevertheless, be an “agreement” and a “financial agreement” within the meaning of the Act. So much is made clear by the provisions of ss 4 and (relevantly) 90B and, conversely, by the fact that, although s 90G specifies when a “financial agreement” is “binding”, there is, in terms, no such thing under the Act as a “binding financial agreement”.
127. If a contract, or agreement is a “financial agreement”, but is not “binding”, it can, if valid and effective as such, have the effect, in relation to Pt VIII of the Act, as set out in In the Marriage of Woodland and Todd (2005) 33 Fam LR 177 ; [2005] FamCA 161 .
128. If the agreement is a “financial agreement” within the meaning of s 4 and, relevantly, s 90B, and is “binding” within the meaning of s 90G, it precludes the court applying Pt VIII to the extent that the financial agreement deals with those matters: s 71A.”
Both Justice Murphy (in Fevia) and Justice Strickland (in Senior) refer to Woodland and Todd [2005] Fam CA 161. That is the decision which is also known as DW v GT (supra). It will be noted that the law, as explained by Finn, May and O'Reilly, JJ in 2005 in DW v GT (supra) has not changed.
The difficulty for the husband in the present case is the fact that the Court has come to the conclusion that the parties had not entered into an agreement concerning the totality of their property. Very importantly, the Court has concluded that the parties had reached no concluded agreement in relation to the J Street, Suburb G property (owned by the Trust).
As noted earlier – it is agreed (essentially) that the parties had themselves agreed that the husband would retain the business. As to the sale of the N Street, Suburb O property – I don't know whether one could put it as high as saying there was an “agreement”. The husband dictated what was going to happen. I do not consider that the terms were clearly defined or ascertainable. The wife agreed generally with the approach that she would receive the lion’s share of the net sale proceeds so that she could purchase a dwelling. In any event, and as noted earlier in these Reasons, the main item of contention relates to the J Street, Suburb G property. Even if the Court was convinced (which is not) that a concluded agreement was reached between the parties concerning the J Street, Suburb G property – the provisions of such an agreement would only be given effect if the terms of the agreement coincided with an order which is just and equitable according to section 79 at the time of the final hearing. In this regard note paragraph 38 of the decision of the Full Court in DW v GT (supra). For the reasons in this judgment, I have come to the conclusion that the outcome sought by the husband would not be just and equitable.
When the matter was next back before the Court, the Court queried the husband's counsel about the different valuations included in the pool contained in the husband's written submissions.
Counsel on behalf of the husband (Mr Wilson) argued that the D Services business should be included not in the sum of $200,000 – but in the lesser sum ($153,000) because if the business was to be sold there would be sale costs. I do not accept that the husband intends selling the business. Even if the property at J Street, Suburb G has to be sold – there is no logical reason proffered by the husband (which the Court is prepared to accept) that the husband could not continue to operate the business from rented premises. For more than 16 years (prior to the purchase of the J Street, Suburb G property) the husband operated the business from rented premises. In the nine years that have elapsed since separation the husband has continued to run the business. He draws an income for himself and his new partner (Ms M) from the business. I do not accept that the husband has any intention of selling the business.
Further, counsel on behalf of the husband submitted that realisation costs of the building should be taken into account totalling approximately $45,000, and hence counsel included the value of the J Street, Suburb G property (owned by the Trust) as $870,500.
The husband does not in fact seem to contest the value of the building or indeed the value of the business. The argument (on behalf of the husband) is that realisation costs should be taken into account. It is argued that the realisation costs of the business will be $45,000 and the realisation costs of the building at J Street, Suburb G will be $41,000. I have already referred to the business and I have made a finding in relation to the business. If the property at J Street, Suburb G has to be sold then, obviously, there will be realisation costs but the value of the property as at the date of the hearing must be included in the pool. The same goes in respect of the business. Therefore, the value of the J Street, Suburb G property will remain in the pool in the sum of $915,000 and the value of the business will remain in the pool in the sum of $200,000.
The wife’s unit R Street, Suburb S remains in the pool in the sum of $325,000. There remains an agreement between the parties in relation to the value of that unit.
The next item to which I will refer is the business bank account – known as D Services bank account. The husband has control of that bank account and concedes in his written submissions the sum of $8,364.
Both parties agree that the husband's household contents should be valued in the sum of $15,500 and the wife’s household contents should be valued in the sum of $10,000.
Both parties agree that the husband's motor vehicle should be included in the pool in the sum of $8,500 and the wife’s motor vehicle should be included in the pool in the sum of $34,112.
The husband's personal bank account is conceded (by the husband) in the sum of $257. Although the husband's trial affidavit at page 12 includes his bank account in the sum of $300. It is only a minor difference, but the evidence (contained in the affidavit) should be the amount included in the pool.
It is said in annexure A to the husband's submissions that the wife’s bank account should be included in the sum of $1,687. The wife does not include any entry in respect of her own bank account in her pool contained in table G of her case outline filed 31 August 2019. The husband's submissions have a note (in a column headed "source") that the evidence to support the submission concerning the balance of the wife’s bank account is the wife’s affidavit referred to as W1. I assume this means the wife's first affidavit. The wife’s first affidavit was filed on 1 April 2018 and at that time her savings were $500. However, in a subsequent affidavit (which is also in evidence) filed on 2 August 2019 the wife’s savings had been reduced to $0. That is the most recent evidence in the wife’s bank balance. Therefore, there will be no amount included in the pool in respect of the wife’s bank balance.
Neither party has any superannuation.
As to the bank account of the Talford Property Trust the husband's written submissions seek an amount of $1,054 be included because it is said that as at 20 December 2019 that was the bank balance. However, the evidence in fact is contained in the husband's trial affidavit. It is the evidence which is relevant – not the written submission – unless the other side makes a concession. The evidence in respect of the Trust bank account is in the sum of $3,000. That is the figure contended by the wife and it is a correct submission.
The wife contends that there should be a figure included in the pool in the sum of $30,800 as “unpaid net distributions” from the Talford Property Trust – $770 x 40 weeks. This in fact seems to be a claim by the wife for a years’ worth of distributions – noting that the husband caused the Trust to cease paying the distributions to the wife after the failed mediation in February 2019. This is not an item of property to be included in the pool.
Both parties have included amounts for the adding back of legal fees. In the wife’s written submissions she includes an add back of legal fees on her own behalf of $10,000 and an add back of legal fees for the husband of $56,616. In the husband's written submissions he seeks and an add back concerning his own legal fees of $72,371. I note annexure A to the husband's own submissions. The husband includes an estimate of the wife's fees in the sum of $25,000 in annexure A to his written submissions and includes an amount of $30,000 on page 17 of the written submissions.
The husband in his written submissions has not referred to any evidence to support the contention that the wife’s legal fees total $30,000. There is no evidence to support the husband's other contention in the same written submissions that the wife’s legal fees should be included (as a notional asset) in the sum of $25,000. Indeed the annexure A to this submissions indicates that in respect of the sum of $25,000 this is nothing more than the husband's estimate of the wife’s fees.
After the decision of the High Court in Stanford it was widely thought that the practice of “adding back” notional property to a table of assets was in fact not the correct practice. It was considered that “notional property” did not constitute “property of the parties to the marriage or either of them” as referred to in section 79 and, further, the practice of including add backs of property which no longer exists was thought to be wrong in principle, because the High Court in Stanford at paragraph 37 directed Courts exercising jurisdiction under section 79 of the Act to “begin consideration.….by identifying, according to ordinary, common law and equitable principles, the existing legal and equitable interests of the parties in the property.” Noting those words from the High Court, the Full Court of the Family Court in Bevan & Bevan (2013) 279 FLR 1 stated in paragraphs 79 of that judgment (per Bryant CJ and Thackray JJ):-
“79. We observe that ‘notional property’, which is sometimes ‘added back’ to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute ‘property of the parties to the marriage or either of them’, and thus is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.”
However, that is not the end of the matter. The Full Court in 2019 in the decision of Trevi & Trevi [2018] FamCAFC 173 reviewed the authorities and explained at paragraph 47:-
“47. The essence of a claim for addbacks is that the asserted sum/s should be added to the value of the existing property interests of the parties and, subsequent to the assessment of contributions, credited to the spending party as part of the value of their assessed entitlements. Doing so does not offend what was emphasised by the High Court. Adding back does not seek to create property interests that do not exist. Rather, doing so emphasises that satisfying the respective requirements of ss 79(2) and (4) of the Act to do justice and equity can require an “accounting” or “balance sheet” exercise for the purposes of s 79(2) and (4), so as to include the value of the dissipated property or expended sums within the total value of the parties’ existing interests in property, and to credit the value of same against the assessed entitlement of the dissipating or spending party.”
The upshot of the decision in Trevi & Trevi (supra) is that Courts exercising jurisdiction in this area should continue to rely upon the earlier authorities – particularly in relation to the adding back of legal fees in the property pool.
The leading authority concerning legal fees is NHC & RCH (2004) 186 FLR 240. In that case the Full Court (comprising Finn, Kay and May JJ) stated from paragraph 56:-
“56. In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
57. If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
58. If funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post-separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions.”
The Full Court in NHC & RCH (and indeed reiterated in Trevi & Trevi) indicated that, “regard should be had to the source of funds” used to pay for the legal fees.
In relation to that particular direction from the Full Court – the parties in the present case have failed to include any evidence as to the source of any funds that have been used by them to pay legal fees.
In the absence of evidence as to the source of funds – the Court could, I suppose, seek to draw inferences as to where the money might have come from. The husband has received distributions from the Trust since separation. The wife has received distributions from the Trust since separation. The husband has drawn a salary from the business. Each of those assets, namely the J Street, Suburb G property (owned by the Trust) and the business are assets which both parties contributed to during the course of the relationship. In the particular circumstances of this case I have come to the conclusion that it is not appropriate to draw inferences as to the source of the funds used by the parties to pay legal fees in the absence of some better and clearer evidence on the point.
The Court however does note that concessions have been made by the parties. The concession made by the wife is that she has expended $10,000 on legal fees and this amount should be added back into the pool as a notional asset. The husband has asked that the Court include a higher amount for the wife, but in the absence of any concession or agreement from the wife it would not be appropriate to include any higher amount.
So far as the husband is concerned, he concedes (in the written submissions filed 20 December 2019) that there should be added back into the property pool a notional asset in the sum of $72,371 reflecting legal fees paid by him.
Even though there is an absence of evidence as to the source of funds concerning the wife’s and the husband's pay legal fees – I do consider that it would be wrong in principle to ignore the written concessions made by both the wife and the husband concerning amounts to be added back into the pool. A concession in written submissions amounts to an admission by a party. Parties will often make concessions and then it no longer becomes necessary for evidence to be led on a particular point. This is one of those situations. The amounts to which I have referred will therefore be added back into the property pool.
In relation to liabilities – the wife in her written submissions does not include any amount for liabilities. The husband, in annexure A to his written submissions includes the following liabilities:-
i)The husband – CBA overdraft $24,204;
ii)The wife – T Bank credit card $3,572;
The only evidence I have been able to find on the topic is contained in the husband's trial affidavit at page 13. On that page the husband had given evidence that the CBA overdraft in his name (presumably for the business) was in the sum of $40,000. He also contended that the wife had a credit card liability of $1,100. The wife does not seem to address this issue.
In fact in the wife’s financial statement filed 15 August 2019 she concedes a credit card liability of $3,572. There is no further evidence from the wife on the issue and hence that figure should be included as a liability on her account. The husband's concession in his own written submissions is that his overdraft had been reduced from $40,000 to $24,204 and that lower amount should also be the amount included as a liability in the pool.
Neither the husband nor the wife in their written submissions sought that any other liability be included.
I therefore find that the pool of assets and liabilities is as follows:-
Assets Value Ownership R Street, Suburb S $325,000 Wife J Street, Suburb G $915,000 The Trust D Services $200,000 Husband and Wife – but the husband is to retain it D Services bank account $8,364 Husband Husband’s household contents $15,500 Husband Wife’s household contents $10,000 Wife Husband’s motor vehicle $8,500 Husband Wife’s motor vehicle $34,112 Wife Husband’s bank account $300 Husband Talford Property Trust bank account $3,000 The Trust Husband’s legal fees $72,371 Husband Wife’s legal fees $10,000 Wife TOTAL ASSETS $1,602,147 Liabilities Wife’s credit card $3,572 Wife CBA Overdraft $24,204 Husband TOTAL LIABILITIES $27, 776 NET PROPERTY POOL $1,574,371
Contributions
The case was run in an unusual manner – to say the least. The husband's side conceded in Court and in written submissions (note paragraph 49 of the written submissions filed 20 December 2019 on behalf the husband) that each side made a 50/50 contribution to the property of the parties to the marriage up to the time of separation. The husband also conceded – "the parties have also agreed that it is appropriate for a 50/50 property split". But the husband's contention is that the wife has already received her 50% share of the value of the property of the parties to the marriage and that she should not be entitled to any further adjustment in her favour. That is where the Court disagrees with the husband.
The parties in this case were married for 34 years. The wife made significant non-financial contributions in the form of homemaking. I accept the wife’s evidence in relation to the homemaking contributions issue. The wife also assisted with the business and the building up of the business.
There is no doubt that the husband showed enterprise and initiative in setting up the business and running it for so many years. He was the prime mover. However, both parties made contributions to the family, to the business and to the other property of the parties – including the J Street, Suburb G property. This much is conceded by the husband's written submission in paragraph 49 that as at the date of separation there has been a 50/50 contribution to the property of the parties to the marriage.
I agree with that assessment.
After the date of separation – that is where the party’s views on the proper approach diverged. I agree with the submissions on behalf the wife. I have already stated the conclusion of the Court that there was no agreement reached between the parties along the lines contended by the husband. Even if there was an agreement reached – this Court will not be bound by such an agreement. If there was an agreement reached (which the Court does not accept) – such an outcome (i.e. the outcome sought by the husband) would not coincide with a just and equitable outcome between the parties – as required by the Full Court’s decision in DW v GT (Woodland and Todd).
I have already made the observation more than once in these Reasons that since separation both parties have received distributions from the Trust in excess of $300,000. It would be unjust and inequitable for the Court in section 79 proceedings under the Act to then conclude that the wife should treat the distributions that she received from the Trust as property (to be credited against her entitlement) and the husband ought not be required to do so.
The husband made significant contributions post separation by continuing to go to work and run the business which enabled the business to pay the rent to the Trust and the Trust to pay its obligations. From the income of the Trust – distributions were made to the husband and to the wife. The question is whether the work done by the husband post separation should be reflected in a different contributions assessment as at the time of the final hearing. There was not any clear submission put forward on this point on behalf of the husband. On behalf the wife it was argued that the husband may well have worked in the business – but he was paid a salary in not insignificant sums. In addition, it is said on behalf of the wife that the business itself was an asset to which both parties contributed and both parties are entitled to a proportion of that property. Further, the J Street, Suburb G property is owned by the Trust and the J Street, Suburb G property is an asset to which both parties have contributed and to which both parties are entitled. The only income of the Trust (as submitted on behalf the wife) is from rental income. Even if D Services did not rent the property – some other tenant would have rented the property. It is to be noted that the Trust leased the J Street, Suburb G property to external parties for 2 and a half years before D Services moved into the premises. The distributions paid to the wife would have been received by her (so it is said on behalf the wife) irrespective of whether or not the husband got out of bed each day or did not get out of bed each day. I agree with this submission.
I am inclined to take the view that the work done by the husband post separation – over more than eight years at the commencement of the final hearing – would ordinarily be reflected in the contributions based assessment. But I must say that the Court does not have the benefit of all of the husband's financial disclosure that it would expect to have. The husband has not provided to the Court up-to-date financial information concerning his income or distributions received by him. Certainly, there is nothing provided beyond 2018.
In addition, I note the concession made in the written submissions by the husband to the effect that – “the parties have also agreed that it is appropriate for a 50/50 property split.” That concession is open, clear and unequivocal. It is, also, with respect, a proper concession to make having regard to the facts of this case and the long marriage and the contributions made by both of these parties to the family and to the property of the parties. As noted, the husband did seek a conclusion that the wife had already received her 50% share and will not receive anything further. But his written submission that a 50-50 property split is appropriate, is not one that was made conditionally upon the Court finding in the husband's favour in respect of the J Street, Suburb G property. The husband's concession contained in his written submissions therefore should stand. In case I am wrong in relation to my assessment of the post separation contributions I have provided some additional Reasons for Judgment under the heading "justice and equity".
Future needs
In relation to section 75(2) of the Act, I note the respective ages of the parties to the marriage. The wife is currently aged 63 and the husband is aged 66 (as at 2020).
The wife has not worked in paid employment for a very long time. She does have some health issues. The wife’s age will most likely be a significant factor which would impact her ability to obtain gainful employment.
The husband has run the business for many years. He has not given any evidence that he intends to cease running the business. I have already made it clear that I do not accept that the business must cease trading merely because the premises at J Street, Suburb G might have to be sold. D Services (the business) was conducted from rented premises in the past and there is no reason why the business could not be run from rented premises in the future. The business is an asset of the parties to the marriage. Both the husband and the wife have contributed to the business, although it must be said that the husband has, obviously, contributed the most to the running of the business. He will be able to continue to receive a salary from the business and I can see no reason why his partner (Ms M) will not be able to continue to receive a salary from the business.
I also have taken into account the age and health of the husband. His age will not prevent him from working in the business. It has not to date. My attention has not been drawn any specific health issues, so far as husband is concerned, that would prevent him from working. The evidence does not disclose that he has been prevented from working to date by reason of any health issue.
In relation to future needs – generally, I do not consider that it is appropriate in the circumstances of this case, for there to be any adjustment under section 75(2).
Justice and Equity.
It will be noted that the Court has already concluded that there was no agreement reached between the parties as alleged by the husband in relation to the J Street, Suburb G property. Even if there was an agreement it would not be binding on the Court. As noted by the Full Court in DW v GT if a non-binding agreement existed, it would need to coincide with a just and equitable outcome so found by the Court. If the husband’s contention were accepted here (i.e. if the Court had concluded that an agreement was reached between the parties) that would not coincide with the Court’s view of justice and equity in this case. Both sides, since separation, have received significant benefits by way of distributions from the Talford Property Trust. The husband has continued to operate the business, but he has received a salary in respect of his work. The salary paid to the husband is in addition to the distributions he received from the Trust. The lack of up-to-date evidence from the husband in relation to his income and the lack of up-to-date evidence in relation to distributions received by him from the Trust – have also influenced the Court’s view of the justice and equity of the situation. In this respect, I note the general principle stated by the Full Court in Weir and Weir (1992) 110 FLR 403 and also in Black & Kellner (1992) 106 FLR 154 – the Court in this case should not be unduly cautious about making findings in favour of the wife.
In relation to the assessment of post separation contributions it is important to note that I have given some detailed consideration to the question of the post separation contributions of the husband. I have already made some comments in relation to this matter under the heading “Contributions” in these Reasons for Judgment. I consider that it is helpful to include these further comments under the heading “Justice and Equity”. If my assessment of post separation contributions is incorrect, then I do not consider it will in fact make any difference to the outcome in the case. If my 50%-50% assessment of contributions as at the date of the final hearing is not correct (noting the extent of the post separation contributions made by the husband) then I would include an assessment as at the date of the final hearing in the husband's favour of 60% – 40%. I note again that even though he went to work each day and ran the business post separation he did also receive a salary. He also received distributions from the Trust. That is to say, but for the fact that he received a salary and but for the fact that he received distributions from the Trust the assessment of contributions in his favour as at the date of the final hearing may have been higher. In any event, if my conclusions in relation to the contributions assessment (as noted under the heading “Contributions”) is incorrect, then I would adjust the conclusion to 60% – 40% in favour of the husband. But, if I took that approach, the view that I have formed is that the section 75(2) factors would then favour the wife. That is because the husband would continue to receive an income from the business (part of the property of the parties to the marriage) and would (if the contributions assessment was 60% – 40%) now have access to more capital than the wife. And the uplift factor in favour of the wife would be 10%. Hence, no matter what way I look at the evidence – the conclusion I reach is that a 50% - 50% adjustment is, indeed, just and equitable.
The Court has already considered, at some length, in these Reasons for Judgment the justice and equity of the orders which the Court proposes. It will be apparent from the reasons that I have come to the conclusion that a 50/50 adjustment of the property of the parties to the marriage is just and equitable. I rely on all the reasons provided herein. It was a very long marriage. The parties started with virtually nothing. They built up significant assets – together. They raised two children. The husband maintains that it will be inequitable if he has to sell the building because he will not be able to continue to run the business. As I have indicated elsewhere in these Reasons – I do not accept that argument. The business can continue to run from leased premises. The J Street, Suburb G building can be sold and the money realised can be used to comply with the orders of this Court.
The conclusion of the Court therefore is that the husband will continue to be able to run the business and draw an income for himself and his new partner Ms M. In addition, he will have the benefit of his share of the value of the property of the parties to the marriage – including his share of the value of the J Street, Suburb G property. It must be noted that the wife already has $325,000 because she owns the unit R Street, Suburb S. The husband will be left with a not insignificant sum when the orders reflecting these Reasons for Judgment are carried into effect. He will be able to purchase a property in which to live (at least one of similar value to the wife’s unit). This was one of his major complaints. The husband maintains that, noting his age, it would be difficult or impossible for him to purchase a property to live in. For the reasons stated I do not accept that contention.
The property of the parties to the marriage will be divided between them 50/50 for the reasons provided.
The parties will be given time to submit draft orders reflecting the Reasons for Judgment.
I certify that the preceding two hundred and twenty-six (226) paragraphs are a true copy of the reasons for judgment of Judge Howard
Date: 17 December 2020
Key Legal Topics
Areas of Law
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Family Law
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Contract Law
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Equity & Trusts
Legal Concepts
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Contract Formation
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Reliance
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Intention
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Offer and Acceptance
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Constructive Trust
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Fiduciary Duty
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