Lane & Wharton
[2010] FamCA 18
•21 January 2010
FAMILY COURT OF AUSTRALIA
| LANE & WHARTON | [2010] FamCA 18 |
| FAMILY LAW - PROPERTY - alteration of property interests - short marriage - asset by asset versus global approach |
| Family Law Act 1975 (Cth) ss 75(2), 79(4)(d) – (g) |
| Brown & Green (1999) FLC 92-873 |
| APPLICANT: | Ms Lane |
| RESPONDENT: | Mr Wharton |
| FILE NUMBER: | SYC | 4294 | of | 2007 |
| DATE DELIVERED: | 21 January 2010 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 14 - 17 December 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Lloyd, senior counsel |
| SOLICITOR FOR THE APPLICANT: | Gayle Meredith & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Miller, QC |
| SOLICITOR FOR THE RESPONDENT: | Lloyd & Lloyd |
Orders
Pursuant to s 79 Family Law Act, an order be made altering the properties of the parties in terms of paragraphs 2 – 5.
Within 28 days the husband transfer all his right, title and interest in the following parcels of real estate to the wife:
2.1.The apartment known as and situated at Sydney New South Wales.
2.2.The premises known as and situated at P1, United States of America.
2.3.The premises known as and situated at P2, United States of America.
Contemporaneously with the transfers referred to in paragraph 2, the wife pay to the husband the sum of $25,534.00.
Subject to any other paragraph, each party be declared to have sole right, title and interest in any asset to which they are entitled, as designated in the table at paragraph 260 in the Reasons for Judgment which sets out the distribution of assets and each party shall do all things and sign all necessary documents to transfer to the other any interest in assets to which they have no entitlement in accordance with that table.
Each party shall have sole liability for any liability designated to them in the table at paragraph 260 in the Reasons for Judgment and will indemnify the other party in respect of any such liability.
Either party be at liberty to apply on seven (7) days notice for any further orders relating to the implementation of these orders.
In the event that either party refuses or neglects to sign any document required for the purposes of these orders the Registrars of this Court are appointed pursuant to s 106A of the Act to sign any such document in the name of such party and to do all things necessary to give validity to the operation of the said document.
IT IS NOTED that publication of this judgment under the pseudonym Lane & Wharton is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 4294 of 2007
| MS LANE |
Applicant
And
| MR WHARTON |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
This case is about what alteration should be made in respect of the property held by each of the parties.
The husband and wife were married for a very short time, having lived together for a slightly longer period prior to the marriage. Both parties are intelligent and have published academic papers (ironically one on conflict management and alternate dispute resolution). A large amount of material has been filed by both of them detailing much of what has happened in the relatively short time that they were together. The focus has primarily been on direct financial contributions. There have been a complex set of transactions involving, movements of monies both ways between Australia and the United States and real estate in the United States interwoven with the interests of the husband’s parents and their trust (the Wharton Trust).
SHORT HISTORY
The wife was born in the United States in 1966 and is 43 years of age.
The husband was born in the United States in 1973 and is 36 years of age.
The parties commenced to live together in March 2002. They announced their engagement in April 2003 and had a “spiritual wedding” in June 2004. The parties legally married in March 2006. There was an initial separation of nearly two weeks commencing 25 November 2005 and a final separation on 26 March 2007. A decree dissolving the marriage of the parties was made absolute on 4 August 2008.
APPLICATIONS
Wife
The wife sought orders in accordance with her amended application filed 20 June 2008 in the following terms:
1. An order that the husband transfer all his right title and interest in the following parcels of real estate to the wife:
(a)The apartment known as and situated at [Sydney], New South Wales;
(b)The proceeds of sale received from the sale of the premises located at [P3], United States of America held on deposit with Citibank Pty Ltd, Multi Currency Account.
(c)The premises known as and situated at [P1], United States of America.
(d)The premises known as and situated at [P2], United States of America.
2. An order that the husband pay the wife’s costs of and incidental to the filing and hearing of this Amended application and the Application for Final Orders.
Senior counsel for the wife made it clear in final submissions that the amount that was sought pursuant to order 1(b) was the amount referred to at item 21 of the balance sheet, namely the amount in the NAB account ending in the numbers 8236 in the sum of $102,806.
Husband
The husband sought orders in accordance with a response to an application for final orders filed by the husband on 8 August 2007 in the following terms:
1. That the respondent husband without delay do all things necessary and sign all documents to effect the transfer to the applicant wife, at her cost, the whole of his right title and interest in the property situate at and known as [P2], USA such transfer to be subject to any mortgage loan secured over the property.
2. That unless otherwise provided for in these orders each party shall be entitled to retain to the exclusion of the other all cash at bank, items of furniture and personality, motor vehicles, shareholding, investments, superannuation entitlements and all other real and personal property in their respective names, control and possession as at the date of these orders.
3. That in the event the husband or wife refuses or neglects to comply with any orders herein, the Registrar or Deputy Registry of this court at its Sydney Registry be appointed pursuant to Section 106A of the Act to execute, in the name of the husband or wife, as the case may be, all deeds and instruments necessary to give effect to the orders herein or any of them and do all acts and things necessary to give validity and operation to the said deeds and instruments.
4. That the applicant wife pay the husband’s costs of and incidental to these proceedings.
The husband made it clear that in relation to order 2 as sought, rather than the husband retaining the whole of the cash in the NAB account (item 21 on the balance sheet, account ending 8236) he would seek an order that that amount of $102,806 be evenly divided between the parties.
DOCUMENTS RELIED UPON
Wife
The wife relied upon the following documents:
10.1.Affidavit of wife filed 29th April, 2009
10.2.Financial Statement of wife filed 29th April, 2009
10.3.Affidavit of Mr G filed 28th April, 2009
10.4.Affidavit of Mr W filed 28th April, 2009
10.5.Affidavit of Mr S filed 28th April, 2009
10.6.Affidavit of Mr M filed 28th April, 2009
10.7.Affidavit of Ms Y filed 27th November, 2009
Husband
The husband relied upon the following documents:
11.1.Affidavit of the husband filed on 1 May 2009.
11.2.Financial statement of husband filed 19 May 2009.
11.3.Financial statement of the husband which was not separately filed but attached to an affidavit filed on 28 August 2009 (Exhibit M).
11.4.Affidavit of Mrs Wharton Snr sworn on 9 November 2009.
CREDIT
Wife
Senior counsel for the husband did not make any submissions as to credit.
The wife spent relatively a short period of time in the witness box. There was no answer she gave that made me doubt her evidence. I accept her evidence was untarnished.
Husband
Senior counsel for the wife made a number of critical comments about the husband’s evidence. Those which I find have some basis are as follows:-
14.1.The husband’s pretended that monies that had been transferred from his St George account were his when he knew that in fact he had originally withdrawn them from the wife’s ANZ account.
14.2.The husband swore an affidavit in interim proceedings for the purposes of seeking money from the sale of the P3 property in order to service arrears on the mortgage on the O (USA) property representing he had no capacity to service the debt. He failed to disclose that monies were owed to him by Ms T and he otherwise had as an available resource, his mother as a financial backer.
14.3.He exaggerated the work that he had done on the Sydney property and the assistance given to Lane & Associates.
14.4.There was no disclosure by the husband of an account styled BCP, which was still operating in 2007.
14.5.There was incomplete disclosure of the financial relationship with Ms T and no initial explanation about what had happened to his beneficial interest in his parent’s trust upon separation from the wife.
14.6.There was no proper accounting for rent received from the properties in the United States.
Some of those submissions cross over issues that go to contribution and s 75(2) matters.
On the whole I find there is some substance in the criticisms made of the husband. Unless I specifically indicate otherwise, I conclude that where evidence of the wife and husband differs, particularly in relation to non financial contributions, I prefer the evidence of the wife.
Husband’s mother
The husband’s mother also gave evidence. I found her to be a witness who attempted to answer questions in a candid manner. She however did not have all the records with her and was not able to remember certain things. Where the husband’s mother’s evidence differs with the husband, I prefer the husband’s mother’s evidence.
CHRONOLOGY
Exhibit C is a joint chronology, some of which is agreed, some of which is not. Some entries on exhibit C are of not any particular relevance.
I set out a chronology in which statements of fact are to be taken as my findings in relation to those facts. Consistent with my findings in relation to credit, I have preferred the version given by the wife where the versions of the parties differ.
The wife was born in the United States of America in 1966 and is now 43 years of age. She moved to Australia in July 2000 and became an Australian citizen in 2004.
The husband was born in the United States of America in 1973 and is now 36 years of age. He moved to Australia in January 2001 and became a permanent Australian resident in 2005.
The parties met in Australia in February 2001 at a tertiary institution. The wife was then employed full-time at a tertiary institution and the husband was a student. The husband was not engaged in paid employment at this time although he was in receipt of a one year scholarship to the value of $12,500.
The husband’s mother says and I accept that in February 2002, the husband’s parents cancelled the debt that the husband owed to them in relation to the H1 property in the USA. The husband’s mother, Mrs Wharton Snr, gave evidence that the debt was approximately US$50,000.
Cohabitation commenced in early April 2002 when the husband moved into the wife’s rented accommodation in Sydney. This property was furnished by the wife and she paid the rent in the sum of $500 per week without any financial contribution by the husband. The wife otherwise paid the majority of all utilities and other outgoings, as well as living expenses including food, entertainment and travel. The husband contributed to some living expenses.
The wife held the following assets at the commencement of cohabitation:
Asset:
Value:
Motor vehicle
Est $15,000 to $17,000
ANZ bank funds
Est $100,000
Investment portfolio with Morgan Stanley
Est $543,000
Funds with Lane & Associates Pty Ltd
Est $175,000
Hang Seng Bank funds
Est $12,600
Chattels
Est $35,000
Loan accounts with Lane & Associates Pty Ltd
Est $116,600
100% shareholding in Lane & Associates
Unknown
Uni Super
Est $42,000
Total:
Est $1,041,200 plus unknown
The wife had no liabilities at the commencement of the relationship.
The husband’s assets at the commencement of cohabitation were:
Asset:
Value:
Motor vehicle
Unknown
Armstrong bank funds (joint account with husband’s father)
US$2,147
Bank of the Lakes funds (BOL)
Est US$3,000
Westpac cheque account funds (wife’s estimate)
Est $7,300
Citibank funds (wife’s estimate)
Est $43,000
Share portfolio
Unknown
Chattels
Unknown
Half share interest in P4 property, USA
The husband sold his half share to his parents on 14 August 2002 for $59,900. The proceeds of sale were transferred to the husband’s Citibank accounts in Nov 2002 ($20,025) and March 2003 ($30,010).
One-third interest in two properties at H USA
Unknown. The husband says that he was credited $100,000 by his parents for his transfer to them of his equity in these properties. This credit was then invested into the properties purchased in P, USA, as a 50% partner with his parents. These property acquisitions and sales were each re-invested via a “1031 Tax-free Exchange” resulting in a final ownership of P5 property and P1 property in the USA.
Total:
$215,347 plus unknown
The husband’s liability of US$50,000 to his parents had been forgiven by them shortly before cohabitation.
The wife’s taxable income for the financial year ending 30 June 2002 was $164,266.
The parties travelled to Asia from 29 June 2002 until 7 July 2002. Some expenses were paid for by the wife’s work and the wife paid for all other expenses.
On 22 July 2002, the wife transferred $54,990 into the husband’s Bank of Lakes Account (“BOL”).
On 14 August 2002, the husband sold his one-half interest in the property at P4 to his parents for $59,990. In November 2002, $20,000 was transferred to the husband’s Citibank account and a further sum of $30,000 was transferred in March 2003. Counsel for the wife submitted that the husband had failed to account for the $20,000.
The husband completed his study in late September 2002. The wife asserts that he then took at 5 to 6 month break during which time he was financially supported by the wife. According to the husband, joint and individual savings paid for their living expenses and that he began a business venture ‘V Business’ with two associates from his tertiary institution once he had finished studying. The wife further contends that the husband did not commence his venture until February 2003. I prefer the evidence of the wife.
From September 2002, the husband received a salary from Lane & Associates Pty Ltd, although the husband says that he did not formally commence working there until May 2003.
The parties travelled to the USA, South America and Asia from 25 September 2002 until 28 October 2002. The wife paid for almost all of the travel expenses for this trip, with some accommodation and transportation costs paid by the husband’s parents.
In November 2002 the parties travelled to Melbourne at the wife’s expense. Whilst in Melbourne an Audi TT motor vehicle was purchased for $65,000 for the wife to drive. The husband contributed the sum of $4,200 to the purchase price of the vehicle. He says he then had the use of the wife’s previous car, a Volkswagen Golf, as his car had been stolen.
On 6 November 2002, the husband transferred $20,000 to Sydney from his BOL account, representing part of the proceeds of sale from the P4 property to his parents. That same month, the husband received an insurance payment of $2,500 for his stolen car which was deposited into the St. George bank account.
The husband’s parents visit the parties in Australia from December 2002 until January 2003.
The husband informed the wife in January 2003 that he had exhausted all monies that he had at the commencement of the relationship.
In or about January 2003, the wife opened an account with monies derived from her income with City Smith Barney Funds for investment in shares and securities. As at 31st January 2003 the balance was approximately $253,525.00. The husband provided investment advice to the wife and arranged a new investment strategy for her, whilst also managing the relationship with the advisor.
In or about February 2003, the husband commenced the V Business venture. The wife paid several thousand dollars for the company’s initial expenses from her income. The husband and his three business partners invested a combined sum of $3,376.75 into the business. The husband says the business overheads, utilities etc were paid by the tertiary institution. It seemed during cross examination that the husband did not consider that working in the V Business venture was full time employment, as he gave evidence that he had not been engaged in full time employment since June 2000.
The parties went to Hawaii for a holiday from 15 March 2003 until 26 March 2003. The wife paid the majority of the costs of this holiday, with some expenses paid for by the husband’s parents.
In March 2003, the parties became engaged. The wife paid for her engagement ring.
In March 2003, the husband transferred $30,000 into his Citibank account representing the remaining proceeds of sale from the P4 property.
In April 2003 the husband was granted permanent Australian residency. The wife paid for him to become an Australian permanent resident.
In May 2003, the husband formally commenced his employment with Lane & Associates and thereafter received $1,934 per month as wages.
The husband’s mother gave evidence that in or about May 2003 US$100,000 was credited to the husband in exchange for his interest in H1 and H2 properties in the United States. The husband gave evidence that this money was then invested in the properties at P6 and P7 in the United States. Both the husband and his mother say that the husband’s parents loaned to the husband the sum of US$11,043 and gave him an advance of US$17,078 against the future sale of P7 to make up a shortfall of funds in the developments at P6 and P7.
In June 2003 the property in Sydney was purchased in the wife’s name for the sum of $900,000 plus stamp duty and other fees. The wife borrowed $720,000 from the St. George Bank and deposited a sum of $355,000 from her ANZ access account into a St. George off-set account to purchase the property. The wife paid all mortgage repayments on this property. The husband states that he paid the conveyancing fees and contributed to the purchase price but I find he did not. Even if I am wrong about that, given the statement made by the husband to the wife in January 2003, the maximum cash the husband had available at this time was $30,000 from the proceeds of sale of P4 property.
The parties moved into the Sydney property in July 2003. The husband performed some minor renovations to the property, including painting, installing a stereo system and assisting in renovating a roof-top terrace with other tradesmen. The wife asserts that the husband’s renovations caused damage to the property which had to be repaired at the wife’s expense. I have insufficient evidence to assess whether or not what the husband did was a negative contribution. I refer later to Browne and Green which says that contributions do not have to produce an increase in value of assets for them to be able to be considered when assessing the contributions of the parties during a marriage.
The wife’s taxable income for the financial year ending 30 June 2003 was $318,179. The husband’s taxable income was $22,843 comprising of wages received from Lane & Associates Pty Ltd.
In June 2003, the property P8 was purchased in the name of the husband’s parents. The husband’s mother gave evidence that the husband contributed $84,000 from the 1031 Exchange on P6 to purchase this property.
In July 2003, the husband purchased a diamond for the wife which was later included in a pendant. The husband says the diamond cost $10,430 and was paid for using his Citibank funds.
In July 2003, the wife added the husband as an authority to her St George account.
In August 2003, the husband discontinued his involvement with V Business. He did not receive any financial reward for his involvement in this venture. The husband did not seek any other form of employment and claimed to suffer depression at this time. The parties had agreed he should commence his PhD studies.
Thereafter, from September 2003 until December 2003, the husband applied for PhD programs in the USA. The husband spent very little time working for Lane & Associates Pty Ltd but received a salary of $2,583 per month until August 2004.The wife assisted the husband with his PhD applications and essays and paid the majority of the parties living expenses.
In November 2003, the husband purchased a one half interest in the property at P9. The husband’s parents purchased the other half interest. The total purchase price was approximately US$53,000. This property was subsequently developed. The husband’s parents funded the husband’s acquisition of this property.
The parties travelled to an Australian Island from 21 November 2003 until 26 November 2003. Some expenses were paid for by the wife’s work and the wife paid all other expenses.
In December 2003, the property at P6 was sold for approximately US$180,000. The husband’s proceeds of sale were approximately US$84,000, which were subsequently invested into the P8 property.
In 2003, the wife had two cosmetic procedures at a cost of $25,000. The husband cared for the wife whilst she recovered.
On 5 February 2004, the husband was offered a PhD position in the United States including a scholarship of US$29,218.50 per annum. The wife was substantially paying for the husband’s living expenses at this time as he had not sought any full-time employment.
The wife travelled to the United States from Australia on three occasions during 2004. The husband also travelled to Australia on one occasion. All flights were paid for by the wife.
In April 2004, the property P7 was sold for US$207,595. The husband received US$94,284 from the proceeds of sale and said that the net capital gain was US$28.007. The husband’s mother says the husband used his proceeds of sale to repay a loan to them. The husband, in his affidavit, says some of the proceeds of sale were used for the development and construction of a unit at P9. I accept the husband’s mother’s version.
The parties travelled to Perth from 23 April 2004 until 4 May 2004. The trip was funded by the wife.
In June 2004, the parties travelled to the Pacific Islands where they had a “spiritual wedding”. The wife spent in excess of $60,000 for the wedding and honeymoon. The parties received approximately US$11,000 from their wedding guests to pay for their travel expenses as well as a US$2,000 contribution by the husband’s parents. In addition, the wife’s parents gave her US$12,700 which was deposited into the parties’ BOL account as a wedding gift of US$5,000. The sum of $32,369.85 was deposited into the BOL account in June 2004.
The property at O, USA, was purchased in June 2004 for the sum of US$252,500. $10,000 was paid from the BOL account (which included money received as wedding gifts) and a further sum of $45,033 was transferred from the BOL account to purchase the property after the wife had deposited $44,000 into this account. The husband and his father borrowed US$215,000 from Citibank to pay the balance of the purchase price. The property was then registered in the names of the husband’s father and the husband as joint tenants. This was to become the home of the husband whilst he was at University from August 2004 until September 2006. The wife was originally reluctant to agree to the husband’s request to purchase the property.
The wife says she paid for the costs of the house and paid for the majority of the contents. The husband’s parents provided some furniture to the parties and loaned a 2004 Ford truck to the husband for his personal use until 2006.
The wife paid money towards the mortgage repayments and that the husband also paid some mortgage repayments using rental income from the P units. The wife was refunded the initial contribution that she made to the property by the husband’s parents during the marriage and she subsequently repaid the sale sum to them.
The wife’s taxable income for the financial year ending 30 June 2004 was $363,434. The husband’s taxable income for the same period was $41,695 of which $40,000 was paid to the husband by Lane & Associates Pty Ltd.
On 27 July 2004, the wife deposited US$143,681 into the husband’s mother’s BOL account.
The parties acquired a one half interest in a vacant block of land at P3 on 5 August 2004. The purchase price was US$275,100, half of which was paid for by the wife and the other half paid for by the Wharton Trust. The husband said that he invested approximately US$24,010 in the development of this property.
The husband moved to the US and commenced his PhD studies in August 2004. The wife provided some financial assistance to the husband at this time. The husband received a scholarship to the value of US$29,218.50 per year tax free and was also employed by the University. He received a stipend of US$22,000 per annum from the University for the period of 2004-2006.
The parties travelled to the United States for a conference from 7 August 2004 until 11 August 2004. The wife’s travel expenses were paid for by her work and she paid for the husband’s travel expenses.
On 14 August 2004, the wife became a joint signatory on the husband’s BOL account (# 701). She remained a signatory until the account was closed on 10 April 2007. However, at no time did the wife operate this account.
In the second half of 2004, various amounts were deposited into the BOL accounts and ING. The original source of most of these funds was from the wife. On 7 September 2004, the husband deposited $8,500 into a BOL account from his university scholarship.
The wife worked at a tertiary institution from 13 October 2004 until 11 November 2004.
The wife travelled to the USA from 13 November 2004 until 8 December 2004.The wife arranged for the husband to consult a psychiatrist during this time and he was prescribed anti-depressants. The wife also assisted the husband with his study by writing and preparing his assignments.
The parties travelled to the United States to visit their parents from 23 November 2004 until 30 November 2004. The wife paid for the flights with her savings.
The wife returned to Sydney on 8 December 2004.
The wife travelled to the United States on six occasions during 2005 whilst the husband travelled to Sydney four times.The wife paid for all of these flights.
In January 2005, the husband rented out a room in the O property for US$650 per month. Another room was rented out in May 2006 for US$450 per month. These rooms were both rented out until August 2007. Counsel for the wife submitted that the husband had failed to account to the wife for the receipt of these rental monies.
In February 2005, the wife deposited US$26,880 into the BOL account.
On 1 April 2005, the wife deposited US$113,181 into the BOL account. This money was then placed in an ING account between 7 April 2005 and 14 April 2005. The husband says $72,500 was transferred to purchase P10 proeprty and that the balance was used for their living expenses in the USA.
On 25 April 2005 a one-half interest in P10 property was purchased in the wife’s name for US$145,000. The other half was purchased by the husband’s parents in the name of the Wharton Trust.
In or about June 2005, the property at P8 was sold. The husband received approximately US$445,000 from the proceeds of sale. The husband gave evidence that these proceeds of sale were used to purchase the properties at P5 and P1.
The parties travelled to Asia and Europe from 8 June 2005 until 28 June 2005. The wife paid for the majority of the parties travel expenses, although some of her expenses were reimbursed and some of the husband’s expenses may have been reimbursed by the husband’s University.
On 24 June 2005, the vacant land at P1, was purchased in the husband’s name for US$149,000. In her affidavit, the wife said she did not receive any documentation from the husband regarding how this property was purchased. The husband gave evidence during cross-examination that the proceeds of sale from P8 were used to purchase this property. The wife says this property was subsequently developed at her expense.
The wife’s taxable income for the financial year ending 30 June 2005 was $341,353. The husband’s taxable income for the same period was $6,700 representing wages received from Lane & Associates.
In July 2005, the property at P9 was sold. The husband received approximately US$151,000 from the proceeds of sale. The sum of $100,000 was said to have been transferred to an Australian bank account, however it was submitted by Counsel for the wife that there is no evidence show that the $100,000 was transferred.
The husband’s mother gave evidence that a new BOL account named ‘BCP’ was opened on 21 July 2005 between the husband and his parents. She gave evidence that US$45,000 of the husband’s proceeds of sale from P9 were deposited into this account along with a further US$45,000 from herself and her husband for use on the P3 development. The account was closed in November 2007. The husband’s mother gave evidence that there was $23,000 in account at the date of separation of which $9,000 was taken by the husband, $4058.50 was used for moving costs and the remaining $8,649 was transferred to the husband’s BOL account.
In my later discussion of disputed item 31A on the balance sheet I find that an amount of $21,264 should be added back against the husband (that is an historical equivalent of US$17,649) ($9000 + $8,649). Also as noted later in the judgment I am prepared to accept that the balance of the proceeds of the sale from P9 found their way into the properties at P3 and the development of the property at P1.
The parties travelled to an American city on a research trip from 15 October 2005 until 18 October 2005. The wife paid for the trip with her savings, although the husband may have been reimbursed some expenses including airfares by his University.
The wife believed the husband had a relationship with another woman at the end of October 2005. The husband disputed this assertion but whatever happened caused tension between them which lead to a short separation in November 2006.
The property at P5 was purchased from the husband’s parents on 1 November 2005 in the husband’s name for US$300,000 (this property is also known as “…”). In her affidavit, the wife said she believed some of the money she had transferred into the BOL account was used to purchase this property however the husband gave evidence that the proceeds of sale from P8 were used to purchase this property, and given the wife had no direct knowledge about this transaction I accept the husband’s evidence about this.
The parties travelled to visit their parents on 5 November 2005. The wife paid for the parties’ flights and their parents paid for their accommodation and expenses.
The parties initially separated on 25 November 2005. A financial settlement of US$285,000 was paid to the wife by the husband’s parents to purchase her interest in P10, P3 and O properties.
The parties reconciled nearly two weeks later on 6 December 2005. Thereafter, the husband’s parents agreed to the wife paying back monies to purchase her previously held property interests.
The parties travelled to the United States to attend the wife’s sister’s wedding from 3 February 2006 until 5 February 2006. The wife paid for the holiday.
The wife travelled from Australia to the United States on 5 occasions and the husband took two trips back to Australia from March 2006 until April 2006. The wife paid for all travel and the majority of the leisure expenses.
The parties legally married in Sydney in 2006.
On 8 March 2006, the wife deposited US$150,000 into the BOL account.
The parties travelled to Uluru from 8 March 2006 until 12 March 2006. The wife paid for the holiday with Ms A and her partner (Ms A was largely responsible for granting work from the husband’s University to the wife for a six week course, paying US$70,000). The husband made the majority of the travel plans for the holiday.
On 13 March 2006, the husband’s mother withdrew US$130,000 from the BOL account. A further sum of US$4,820 was withdrawn by her on 16 March 2006.
On 22 March 2006, the husband’s mother withdrew US$11,042.63 from the BOL account.
On 4 June 2006, the husband’s parents deposited $5,000 into the BOL account.
On 15 June 2006, the wife deposited US$1,088 into the BOL account.
The parties travelled to Canada for a conference from 24 June 2006 until 28 June 2006. The wife paid for the husband’s travel expenses which were not reimbursed. The majority of the wife’s travel expenses were reimbursed by a third party.
The wife’s taxable income for the year ending 30 June 2006 was $363,433. The husband’s income for this period was nil.
In or about June or July 2006, the husband decided to leave his University prior to the completion of his PhD. The wife did not agree with his decision to do this. The husband remained in the United States until September 2006 but did not work during this period. The husband then moved to Perth to recommence his studies, with the wife paying his travel and transportation costs.
The parties travelled to the United States to visit the husband’s family from 6 July 2006 and 10 July 2006. The wife said she paid for the parties’ flights however the husband’s mother said she later reimbursed the husband and wife for the cost of these flights.
The parties travelled to the United States from 3 August 2006 until 7 August 2006. The wife paid for the holiday from her income, although the husband travelled to between States using his parent’s car.
The parties travelled to another US State from 12 August 2006 until 16 August 2006. The wife was reimbursed for most of her expenses by a third party and paid for any other expenses of the parties.
In September 2006, the wife purchased a Volkswagen Golf for $23,000. At this time, the wife made repayments of $5,000 per month on the Sydney property, $2,000 per month on the O, USA, property and paid for the husband’s study expenses in Perth.
On 5 September 2006, the wife deposited US$85,000 into the BOL account.
The parties travelled to Queensland from 14 September 2006 until 17 September 2006 at the wife’s expense.
On 26 September 2006, the wife deposited US$115,000 into the BOL account. This money was used to purchase the property at P2 in the joint names of the husband and wife on 29 September 2006 for US$105,768.10. An amount of $5,687.72 transferred to the husband’s parent’s bank account to pay expenses on the P3 property.
The wife says she fell pregnant in late September 2006 whilst travelling in Egypt with friends. The husband does not agree asserting that he was the father of the child. The wife had a miscarriage in early October 2006 and returned to Australia in late October 2006. These matters are recorded in Exhibit C, the joint chronology, and were not the subject of any other evidence.
On 4 October 2006, the wife deposited US$4,000 into the BOL account.
The husband was engaged in a small amount of employment with Lane & Associates when he returned from Perth from November 2006 until March 2007.
The parties participated in marriage counselling from November 2006 until March 2007.
The wife paid for a trip to Western Australia for herself, the husband and his parents in February 2007. The wife took one month off work to host the husband’s parents and paid in excess of $5,000 in expenses for the husband’s parent’s holiday
The wife began selling shares in her Smith Barney portfolio from March 2007 until July 2007. On 23 May 2007 she paid $77,382.74 from the sale of the shares to reduce the debt on the Sydney property. On 12 July 2007 a further sum of $198,138.64 from the sale of the shares was paid into a Citibank account.
On 5 March 2007, the husband commenced his PhD studies at a Sydney University. He received $20,000 as a tax-free stipend for a University Postgraduate Award from March 2007 until March 2008.
The parties travelled to Asia from 7 March 2007 until 12 March 2007 at the wife’s expense.
Separation occurred on about 25 March 2007. The husband was working on a part-time basis at the university at the date of separation.
The husband withdrew $30,000 from a Citibank account on 25 March 2007 to pay for the O property mortgage shortfall. The husband says an interim loan of $30,000 was made by his parents on 6 March 2008 and that the funds from Australia were used to reimburse his parents for the interim loan.
The parties had the following assets at the date of separation:
Asset:
Value:
Sydeny property (registered in the wife’s name)
$950,000
P5, USA (registered in the husband’s name)
US$215,000
P1, USA (registered in the husband’s name)
US$250,000
P2, USA (registered in the names of the husband and wife)
US$83,000
One half interest in P3, USA (registered in the husband’s name)
$130,000 (later sold for US$100,000)
A 100% interest in O, USA (property registered in the names of the husband and husband’s father)
Unknown. $638,807 was outstanding on the mortgage as at 26 April 2007.
Husband’s chattels
$10,000
Wife’s chattels
Est $35,000
Wife’s Golf motor vehicle
Est $17,000-$20,000
Wife’s Audi motor vehicle
Est $30,000
Wife’s shares in Lane & Associates
NIL
Loan account with Lane & Associates
$12,914
Husband’s NAB account
$7,538.60
Husband’s BOL account
US$7,574.26
Wife’s ANZ bank savings
Unknown
Wife’s ANZ term deposit
$51,287
Wife’s St George account
$12,536.48
Wife’s Smith Barney portfoloio
$276,964
Husband’s superannuation (UniSuper, AXA Australia)
Est $20,000
Wife’s superannuation (UniSuper)
Est $250,000
The husband had a mortgage liability with his father for the O property at the date of separation estimated at $193,000.
The wife had a credit card debt of $16,741.81 which related to joint expenses of the husband and wife. She also had a mortgage liability with the St George Bank over the Sydney property which had a balance of $683,807 as at the 26 April 2007.
In or about March 2007, the husband’s parent’s family trust was revised to remove the husband as an Alternate Successor Trustee. The husband’s mother gave evidence that the trust was revised because of the parties’ separation and gave evidence that she and her husband were considering abolishing the trust altogether.
On 4 April 2007, the husband’s parents deposited US$5,000 into the BOL account to reimburse their holiday expenses. I infer this was a reimbursement for the expense the wife incurred when the husband’s parents came to Australia in February 2007.
On 6 April 2007, the husband withdrew US$7,500 from the BOL account.
The husband moved into rented accommodation on 6 May 2007 at a cost of $270 per week.
On 16 May 2007 and on 22 May 2007, the wife gave an undertaking not to dispose of assets and securities.
The wife’s taxable income for the financial year ending 30 June 2007 was $291,287. The husband’s taxable income for this financial year is unknown.
The husband commenced living with Ms T in October 2007.
The husband travelled to the United States for a conference and to visit his family from 15 November 2007 until 30 December 2007.
The P3 property was sold in about January 2008 for US$200,000. The wife asserts that there was a capital loss of more than US$100,000. The husband says it was a capital loss of US$72,938. A portion of the proceeds of sale were used to pay the shortfall on the mortgage on the O property and the remaining funds were transferred to the NAB account.
On 8 January 2008, the husband was added to Ms T’s bank account.
The property at O was sold in March 2008 for between US$175,000 and US$185,000. There was a net capital loss according to the husband of US$83,035. A payment of approximately US$25,000 was required to meet the shortfall between the sale price and the outstanding mortgage of US$191,610 as at the date of sale.
On 27 May 2008, the husband performed contracting work for Ms T to the invoiced amount of $9,200. The husband used the payment received on these invoices to purchase a scooter for $9,200 on 17 June 2008.
The husband and Ms T commenced living in a property in Sydney on 5 July 2008. The property is registered in Ms T’s name but the husband asserted it is owned in trust for her mother. The husband gave evidence that he pays $115 per week in rent.
On 7 July 2008, the husband’s lease on his rented unit expired. He then travelled to the United States to attend a funeral from 7 July 2008 until 22 July 2008.
The husband travelled to China for a holiday during the Beijing Olympics from 3 August 2008 until 24 August 2008. The cost of his travel was paid for by Ms T’s father.
A Decree Nisi was pronounced on 4 August 2008.
On 16 October 2008, the parties’ Sydney property was valued for $950,000.
The husband’s parents visited the husband in Sydney from 23 December 2008 until 25 January 2009.
On 17 October 2009, the property at P5 was valued at US$175,000, the property at P1 was valued at US$170,000 and the property at P2 was valued for US$52,000. The properties are worth significantly less now than they were worth at the date of separation.
The husband’s mother gave evidence that she and her husband had loaned the husband approximately $140,000 post separation.
THE LAW
Approach taken
In this matter my task is to:
149.1.Identify and value the property, assets, financial resources and liabilities of the parties;
149.2.Identify relevant contributions and assess them;
149.3.Consider relevant matters referred to in Section 79(4)(d) – (g) Family Law Act (“FLA”);
149.4.Ensure my order adjusting the property, assets and liabilities of the parties is just and equitable.
Themes from comparable cases
This is a childless marriage of less than median length. In those circumstances, there has to be a higher level of scrutiny of the making of financial contributions than would otherwise be the case in a longer marriage. The cases referred to provide guidance as to the range in which my discretion should be exercised.
In Busby (1988) FLC 91-919 the Full Court said:
“In a marriage of four years, with no dependent children being involved on either side, it ought to have been apparent to the parties’ legal advisers that each party’s actual financial contribution to the marriage was the primary issue.”
In this case the parties were together for five years with no dependent children.
In Kennon (1997) FLC 92-757 the marriage was 7 years and there was an 18 year age difference between the parties. The Full Court in Kennon adjusted upwards the trial judge’s decision giving Mrs Kennon $400,000 at stage 2 and a further $300,000 at stage 3 (a total of $700,000 out of a pool of assets of $8,700,000). This represented a division of 4.6% at stage 2 and 3.4% at stage 3. However, the assets in that case were $8,700,000 compared to the $1,660,600 in this case.
In W & W (unreported decision of Baker, Lindenmayer and Smithers JJ delivered 28 January 1997), the marriage was of a 5 ½ year duration. The assets were $2 million. The husband was 56 and the wife 53. The Full Court when re-exercising its discretion gave the wife 5% at stage 2 and 2.5% at stage 3. That case had an unusual feature that the wife had lost about $170,000 post separation in a bad business venture and the Full Court said that the 5% at stage 2 would have been higher but for that. Senior Counsel for the husband’s submission was that notionally you would give the $170,000 to the wife (adopting the approach of the Full Court in McMahon - see below). The effect on a global analysis then would be that the wife would get a higher percentage overall because that asset would have been in the pool of property and the wife would have received it.
In P & P [2002] FamCA 1006 the parties were married six years and the trial judge had given the wife 5% based on contributions and 7% based on 75(2) factors in an asset pool of approximately $10 million. The wife in that case had a brain tumour.
The majority found that the trial judge failed to provide adequate reasons for reaching her conclusion in relation to contributions and the matter was sent back for rehearing. Guest J by way of obiter and referring to the facts of that case said:
“120….it is not, in my view, appropriate in the particular circumstances to assess the wife’s contribution pursuant to s.79(4)(a) to (c) of the Act to the whole of the asset pool in percentage terms. In the result, such an exercise is unrealistic and meaningless. There was no evidence that it had any effect or impact upon the pool of assets. A percentage division is a useful technique in determining contributions to a pool of property which has grown over the course of a marriage. Where the pool has remained approximately the same and one party’s initial contribution so manifestly outweighs the other’s, as in these proceedings, it is misleading to consider a percentage division of the final pool…
123….on any analysis, the result of her 5 percent assessment in favour of the wife does not sit satisfactorily with the evidence. The court must carefully safeguard against using the provisions of s.79 of the Act as a “….source of social engineering or as a means of evening up the financial positions of the parties to a marriage”. See Kennon v Kennon (1997) FLC 92-757 at p84,303. It is not the purpose of the relevant provisions of the Act to”….equalise the financial strengths of the parties” per Wilson J in Mallet v Mallet (1984) 156 CLR 605 at 638 when addressing his attention to the object of s.75(2) of the Act. Unless there is a readily understandable pathway to a conclusion, any criticism that a trial judge may have engaged in “….an unbounded exercise in distributive justice.” (Per Gleeson CJ and McClelland in Equity in Evans v Marmont (1997) DFC 95-184 at p77,610) is open to a critical and perhaps, sceptical observer.
124. It is to be recalled that the mandatory prescription of the Act is to evaluate contributions pursuant to s.79(4) and there “….is an obligation on the trial judge not only to identify the relevant contributions but also to assess them” (emphasis added) per Ellis, Baker and O’Ryan JJ in Pierce v Pierce (1999) FLC 92-844 at p85,881….
131. In making this observation, I do not detract from the force of the proposition that it is “….neither practical nor desirable to approach cases in such a pseudo-mathematical way (Clauson v Clauson (supra) at p81,090-10, G v G (1984) FLC 91-582 at p79,697 per Nygh J). There are cases, however and this is one, where the reasons stated, the expression of an award in percentage terms may bring about an unjust and inequitable result, and in so doing offend the very mandate expressed in s.79(2) of the Act.”
In GBT & BJT [2005] Fam CA 683 (Kay, Holden, Warnick JJ) Strickland J was dealing with a 6 ½ year cohabitation. The age difference was 18 years (but the parties were 54 and 36). There was $3 million involved. The husband was an accountant. Strickland J gave 12.5% at stage 2 and 5% at stage 3, a total of 17.5%. The Full Court found that this was manifestly excessive and re-exercised their discretion giving 7.5% at stage 2, 2.5% at stage 3, a total of 10%.
Disparity in financial circumstances and the duration of the marriage: ss 75(2)(b) and ss 75(2)(k)
In Farmer and Bramley (2002) FLC 93-060 Kay J discussed Guest J’s analysis of s.75(2) considerations and said at paragraph 71:-
“The manner in which s 75(2)(b) can be utilised to bring about an adjustment of property interests was discussed fully in Collins (1990) FLC 92-149 by Ellis, Fogarty and Gun JJ. There their Honour's upheld Nygh J's judgment making an adjustment of $1,000,000 in favour of a wife, who already owned assets worth more than that sum. Nygh J had specifically identified a disparity in capital as a basis for making that adjustment. My apologies for setting out such an extensive passage but it seems to me to put to rest any suggestion that there can only be an adjustment under s 75(2)(b) if there is some causal nexus between the disparity and the marriage itself”
Kay J then extensively quoted from Collins (1990) FLC 92-149 and at paragraph 94 of the judgment his Honour concluded that the disparity in capital positions of the parties reached as a result of the distribution on contributions (at step 2) is a matter that can be taken into account (by inference under s.75(2)(b)). That is, his Honour disagreed with Guest J’s proposition that there had to be a connection between the capital position of the parties and the life of the marriage before weight could be placed upon a disparity in the financial positions of the parties in the balancing exercise.
More recently in GBT & BJT (supra) the Full Court (Kay, Holden and Warnick JJ), without specifically rejoining the debate emphasised that when giving weight to sub section 75(2)(b) FLA, the other subsections of s.75(2) FLA including subsection 75(2)(k) FLA also have to be weighed.
At paragraph 64 of GBT & BJT the Full Court said:
“We are inclined to the view that, in addressing the weight to be given to the disparity in the parties’ incomes and earning capacities, his Honour may well have given insufficient weight to the shortness of the marriage (relevant under section 75(2)(k)) and to the minimal nature of the wife’s contributions, particularly having regard to the fact that such contributions as she did make were mainly in the homemaker sphere, the husband paid for the provision of a great deal of domestic assistance, and there were no children of the parties (relevant under section 75(2)(j)).”
Earlier in Kennon (1997) FLC 92-757, Fogarty & Lindenmayer JJ when dealing with 75(2) factors said of the facts in that case at page 84,303:
“On the one side, there are circumstances that this was a relatively short marriage, with no children, and the wife is able to continue employment of the type which she had previous to cohabitation….On the other hand, there are huge differences between the parties’ incomes, assets, future income-earning capacities and superannuation benefits. His Honour pointed out on a number of occasions that these differences existed at the time the parties commenced to live together and that if their paths had not crossed and if they had not lived together for five years it is likely that the difference would have remained the same. However, we are not persuaded that that is the beginning and end of the issues. Whilst we acknowledge that Section 79 is not a source of social engineering or as a means of evening up of the financial positions of the parties to the marriage, (see, for example Clauson & Clauson (1995) FLC 92-545; Waters and Jurek (1995) FLC 92-635 and Lyon and Bradshaw (Full Court 16 May 1997, not yet reported)), nevertheless the fact is that these parties were married for a not insignificant period, each made contributions which we have discussed and their obligations to each other do not cease on separation. Their marriage carried with it advantages and obligations and, so far as the settlement of their property on separation or divorce is concerned, those obligations are to be determined in accordance with the detailed provisions of s.79.”
The “not insignificant period” of the Kennon marriage was seven years.
In 2007 the median duration of an unsuccessful marriage to date of separation was 8.9 years. In 1984 it had been 7.7 years.[1]
i)[1] Source: Australian Bureau of Statistics, Divorces, Australia 2007.
In this case the cohabitation 5 years. So, the parties’ marriage is on the shorter side of median duration.
In this case I will take into account both the disparity of the financial circumstances of the parties and the length of the marriage as part of the mix of things I consider under Section 79(4)(d) – (g) FLA.
Asset by asset or global approach
The Full Court of the Family Court in Norbis and Norbis (1984) FLC 91-543 held that, in the case of a marriage of long duration where there have been countless changes in the family fortunes generally, and perhaps of major assets in particular, the most the Court can do is to take into account all of the matters referred to in s 79(4) of the Family Law Act 1975 and fix an overall proportion on a global view of the totality of the assets to be divided. On appeal the High Court (whilst overruling the Full Court’s decision for other reasons) endorsed the Full Court’s role in giving guidance as to the approach to be taken in the majority of cases. Mason and Deane JJ agreed the global approach will be the more convenient one in the majority of cases. Brennan J agreed that the Full Court was entitled commend the global approach.
The Full Court in Lenehan and Lenehan (1987) FLC 91-814 at page 76,148 commented:-
The judgments of the Full Court in Norbis v Norbis (1986) FLC 91-712 demonstrate the very wide discretion which the trial judge has in the approach that he may adopt under sec.79. In particular the judgments in that case discuss the “global” and the “asset by asset” approaches, and demonstrate that this is largely a matter for the trial judge to determine in the exercise of his discretion. However Norbis’ case is not a carte blanche to adopt either view irrespective of the circumstances of the individual case. There are cases where one approach or the other is clearly appropriate and a failure by the trial Judge to adopt that approach may demonstrate error.
In McMahon (1995) FLC 92-606 the marriage was 6 years and the Full Court said in that case an asset by asset approach should be adopted given that the parties had kept their financial circumstances very separate (apart from the joint assets they had acquired together). Because an asset by asset approach had not been adopted in that case the Full Court said that the trial judge failed to conclude that neither party had made any contribution to the other’s separately held assets. That meant that the trial judge had failed to recognise the simplest and most obvious course which was to make no order affecting the separately held assets and to make an order of equal division of the jointly held assets subject to any appropriate allowance for 75(2) factors if that was thought proper.
Senior counsel for the wife suggested that I should adopt an asset by asset approach in this case. Neither party is suggesting that the simplest and most obvious result that achieves a just and equitable outcome is to leave the assets as they are. The husband is suggesting that the wife take one of the properties in the United States which is in his name. The wife wants to take two properties that are in his name and one half of a cash fund that is currently in the husband’s name. There was in this case a substantial intermingling of the wife’s monies into assets that were being traded and developed in the United States by the husband and the trust controlled by the husband’s parents. Given the complexities of the movement of money in this case and the huge volume of material that has been tendered in evidence, it is difficult to be precisely mathematical in terms of working out contributions to the particular properties in the United States. However, given the shortness of the marriage and the overwhelming contributions made by the wife, it is appropriate to commence the assessment of contributions using an asset by asset approach. There are, however, reasons associated with the differing fates of investment in property in Australia and the United States that will lead me in the end to reassess contributions using a global approach.
BALANCE SHEET
On 10 February 2009 the parties agreed on a balance sheet (Exhibit B) but that document had undergone substantial revision by the end of the trial.
The settled balance sheet is set out below. Where values are not agreed they appear in bold as determined by me. The reasons for each determination is set out under item numbers following the table. Although the parties eliminated some items, I have retained the item numbers as they were referred to throughout the hearing.
Description
Husband
Wife
Agreed/
Determined
ASSETS
1.
W
Sydney property NSW
950,000.00
950,000.00
950,000.00
2.
H
P5 property (US $130,000)
140,952.00
140,952.00
140,952.00
3.
H
P1 property (US $145,000)
157,216.00
157,216.00
157,216.00
4.
H
Land at P2 (US $41,000)
44,454.00
44,454.00
44,454.00
5.
W
Audi TT 2000
19,650.00
19,650.00
19,650.00
6.
W
Golf Volkswagen 2004
13,150.00
13,150.00
13,150.00
7.
H
Vespa GTV 250 2007 motorcycle
6,550.00
6,550.00
6,550.00
8.
H
Australian Citibank account (Balance of proceeds of sale of P3 property)
76.00
76.00
76.00
9.
H
US bank of Lakes account No. …702 (US $15)
NIL
23.00
NIL
10.
H
USA Bank of the Lakes account No. …703 (US $15)
3,138.00
3,138.00
3,138.00
11.
H
USA Bank of the Lakes account No. …704 (US $2,821)
NIL
NIL
NIL
12.
H
USA ING Direct (US $1)
NIL
NIL
NIL
13.
H
Australian ING Direct
5.00
5.00
5.00
14.
W
St George, No. …155
500.00
500.00
500.00
15.
W
USA Citibank
0
0
0
16.
W
USA Citibank account 4559 (US $991)
1,113.00
1,113.00
1,113.00
17.
W
USA Citibank account 4575 (US $699)
785.00
785.00
785.00
18.
H
USA Citibank account …613
233.00
233.00
233.00
19.
H
NAB account …844
76.00
76.00
76.00
20.
H
NAB account …154
473.00
473.00
473.00
21.
H
NAB account …236
102,806.00
102,806.00
102,806.00
22.
W
Furniture and effects and Personal Property (including jewellery)
30,499.00
30,499.00
30,499.00
23.
J
Citibank
0
0
0
24.
H
Furniture and effects and Personal Property (including jewellery)
8,642.00
8,642.00
8,642.00
25.
W
Shares in Lane & Associates Pty Limited
NIL
NIL
NIL
26.
H
Husband’s interest in his parents’ trust
NIL
NIL
NIL
27.
H
Husband’s Bank of Lakes account
0
0
0
28.
W
Income receivable from husband’s University
76,620.00
NIL
NIL
29.
W
Loan to Lane & Associates P/L
12,914.00
NIL
12,914.00
30.
W
Interest in Lane & Associates P/L
34,117.00
NIL
34,117.00
31.
H
Interest in Wharton Recovable
0
0
0
31A
H
Bank of Lakes Account BCP US $17,649
NIL
30,360.00
21,264.00
ADD BACKS
32.
W
Balance St George no. …155 at separation $12,536 less now $7,018
0
0
0
33.
H
Citibank mastercard as at separation paid by wife
NIL
16,742.00
8,371.00
34.
H
USA Bank of Lakes account No. …701 (USA $7,574)
NIL
11,834.00
9,125.00
35.
H
USA Bank of Lakes account No. …122
0
0
0
36.
H
USA Citibank No. …801
0
0
0
37.
H
USA ING
0
0
0
38.
H
Australian ING
0
0
0
39.
W
Paid legal costs
N/A
N/A
169,918.00
40.
H
Paid legal costs
N/A
N/A
153,122.00
41.
W
Monies held in solicitor’s trust account
NK
N/A
10,000.00
42.
H
Monies held in solicitor’s trust account
37,400.00
N/A
37,400.00
43.
H
Amount held in USA account in husband’s name from wife’s transfers
0
0
0
44.
H
50% of rental payments received by husband from USA properties
NIL
NIL
NIL
45.
H
Savings at separation
0
0
0
46.
W
Expenses updating Sydney unit
0
0
0
47.
W
Jewellery purchased since valuation
0
0
0
48.
W
Strata fees, utilities and maintenance expenses of O property
0
0
0
49.
W
Mortgage repayments on O property
0
0
0
50.
H
50% rent received by husband from USA properties (US$77,000)
0
0
0
SUPERANNUATION
51.
H
Unisuper
2,111.00
2,111.00
2,111.00
52.
H
AXA Australia
13,010.00
13,010.00
13,010.00
53.
W
Unisuper
275,749.00
275,749.00
275,749.00
TOTAL ASSETS
$2,227,419.00
LIABILITIES
54.
W
Mortgage: St George Bank Ltd
338,469.00
338,469.00
338,469.00
55.
H
Mortgage over P5 property
154,108.00
NIL
154,108.00
56.
W
Citibank MasterCard
12,569.00
12,569.00
12,569.00
57.
W
Citibank Visa
0
0
0
58.
H
Citibank MasterCard
NIL
NIL
NIL
59.
W
Unpaid tax
NK
18,017.00
18,017.00
60.
W
Loan from G Lane
22,222.00
22,222.00
22,222.00
61.
H
Loan from husband’s parents
27,364.00
NIL
20,000.00
62.
H
Outstanding cheques against Bank of the Lakes
6,425.00
NIL
1,402.00
TOTAL LIABILITIES
$566,787.00
TOTAL NET ASSETS - currently
$1,660,632.00
Items 2, 3 and 4
Both counsel requested that Items 2, 3 and 4 be converted at the exchange rate close to the date of delivery of the judgment. The agreed value in US dollars for item 2 is $130,000; for item 3 is $145,000 and for item 4 is $41,000. The original exchange rate the figures currently in the balance sheet are at an original exchange rate (1 AUD = .9137 US cents). At the close of business on 18 January 2010, the exchange rate was 92.23 US cents.
Item 28 - income receivable from US University by the wife
The husband asserts that the wife is owed income that she has earned from the University in the sum of $76,620. The wife denies that that is so. The husband relies on paragraphs 97 and 98 of the wife’s affidavit sworn 28 April 2009. That evidence includes page 304 of the wife’s exhibited bundle which indicates her taxable income as at 30 June 2008 was in the sum of $401,273. There is nothing on the face of the evidence referred to by the husband that there is any money owed to the wife by the University in the United States. The wife’s financial statement filed 29 April 2009 does not disclose any such debt by the University and the wife was not asked any questions about this topic. I have not been referred to any evidence that could support the assertion by the husband that this money is owed by the University to the wife.
Item 29
One of the liabilities on the balance sheet of Lane & Associates Pty Ltd is a loan owed to the wife in the sum of $12,914. The total net equity of the company is discussed in item 30 below. It is however appropriate to add back the amount of the unsecured loan to the wife otherwise the use of a net equity figure in respect of the company (which takes into account the debt to the wife) becomes an inappropriate figure to value the interest in Lane & Associates Pty Ltd at 30 June 2007.
Item 30 - wife’s interest in Lane & Associates
The husband claims that the wife has an interest in her trading company, Lane & Associates Pty Ltd. The wife’s financial statement filed 29 April 2009 estimates the value of her interest in the company at nil (item 41). The husband refers to Exhibit H and particularly to the balance sheet of the company as at 30 June 2007 (this being the most recent balance sheet of the company put into evidence). Senior counsel for the wife sought to reopen his case and tender, during final submissions, a copy of the 2008 balance sheet. That was opposed and when senior counsel for the husband also suggested he might reopen the husband’s case, senior counsel for the wife withdrew the tender of the 2008 financials of the wife’s company. The 2007 balance sheet shows the total equity in the company at $36,017. Part of that equity is made upon by a motor vehicle which appears as a sum of $1,900 at note 4. The primary asset of the company as at 30 June 2007 was cash at bank in the sum of $43,637. I think it is appropriate to recognise the assets that the wife had in her company which she fully controls and owns as at 30 June 2007. The appropriate figure is $34,117 ($36,017 - $1,900).
Item 31A - husband’s interest in the Bank of Lakes account BCP account
The wife claims this interest held by the husband is in the sum of US$23,000.
I was told by senior counsel for the wife that converted at 70 cents in the dollar, that is $30,360 (I think that is an incorrect conversion rate; the correct conversion rate at 70 cents in the dollar would be $23,857). The reason for the lower conversion rate is that this money is being converted as at the date the husband took it after separation. The evidence about the husband’s savings at separation is contained in paragraph 268 on page 64 of his affidavit. In subparagraph H he says that his parents held US$23,105.02 (which he then converted to approximately AUD$27,870) in trust for him for real estate investment purposes. He annexed a document marked “158” which is a summary sheet detailing, inter alia, that deposit. The husband’s mother was asked questions about this account. She indicated that the husband had these monies available to him in about May 2007 and said $4,058 of it was used to move the husband’s furniture back to Australia. The remaining amount was available to him. I find it is appropriate to add the remaining amount back to the balance sheet as an asset that was available to the husband. The amount is US$17,649 ($9,000 + $8,649). It was agreed the exchange rate be in accordance with the way the husband has calculated the exchange rate in his affidavit.
Paragraph 268 of the husband’s affidavit, subparagraph (a), indicates that as at the date of separation the husband had $7,574.26 (which he approximated to be $9,136) in the Bank of Lakes Account ending 701. This is an equivalent to an exchange rate of AUS $1 = 83 US cents.
When converted at 83 cents, that figure is $21,264.
Item 33
The wife had a Citibank mastercard at separation in the sum of $16,742. It had been used to pay joint expenses. It was paid by the wife after separation. The wife seeks that that be added back against the husband. Senior counsel for the husband contends that only half the liability should be added back against the husband. I accept that submission. I add back half the liability in the sum of $8,371.
Item 34 - The husband’s interest in the US Bank of Lakes Account No. 701
The amount of US $7,574 was conceded. Using AUD $1 = 83 US cents the figure is AUD $9,125.00.
Item 39 - wife’s paid legal costs
Exhibit F indicates that the wife’s paid legal costs were in the sum of $169,918. Whether or not this amount gets added back depends upon whether I adopt the Full Court’s approach in Chorn & Hopkins (2004) FLC 93-204 at paragraph 58 on the one hand and in Omacini (2005) FLC 93-218 at paragraph 30(a) on the other hand.
Senior counsel for the wife submitted that even if the wife’s legal fees were added back onto the balance sheet, if an asset by asset approach was adopted then the husband could make no claim to having made a contribution towards that asset and for that reason it would be easier just to leave the wife’s legal fees off the balance sheet in the first place. Whilst that argument has some force, in my view the more transparent approach is to recognise what the Full Court has said in Omacini (2005) and Farnell (1996) FLC 92-681 and add back the legal fees. I will then consider contributions to that asset later in the judgment.
Item 40 - husband’s paid legal costs
Exhibit G indicates that the overall money that the husband has paid towards his legal costs is in the sum of $190,522. However, an amount of $37,400 is held in trust (and is accounted for in item 42), so the amount of his paid legal fees is $153,122.
Item 41 - monies held in solicitor’s trust account for wife
Exhibit F indicates that that is a sum of $10,000.
Item 42 - monies held in solicitor’s trust account for husband
Exhibit G indicates that that is a sum of $37,400.
Item 44
The wife claims that the husband should be held to account for 50 percent of the rental payments received by the husband from the US properties in the sum of $41,848. That is a gross figure which is found in annexures 55 to 59 of the husband’s affidavit which are referred to in paragraph 261 of his affidavit. The rentals are in relation to the properties at P1 and P5 for the years 2005, 2006 and 2007.
On the second day I was referred to annexure 51 of the husband’s affidavit. Annexure 51 has a figure of US $58,389 for rents from 2000 through to 2009. In the end senior counsel for the wife abandoned any attempt at mathematical calculation of the benefit of rents received by the husband and agreed that any such amount should be removed from the balance sheet. This was on the basis that senior counsel for the wife intended to take up the issue of the rents received by the husband from the American properties when making submissions about contributions.
Item 55
It was agreed that the whole of this amount related to the payment of legal fees. Given that the husband’s legal fees are to be added onto the balance sheet, I am of the view that this liability should also be included on the balance sheet.
Item 59
The wife asserts that an unpaid tax issue should be brought to account in the sum of $18,017. She indicates in April 2009, when she swore an affidavit and her financial statement (paragraph 97 of the affidavit, item 49 on her financial statement) that this tax was outstanding. The husband submits that exhibited at 304 of the wife’s bundle attached to her affidavit is an estimate for tax and the wife gave no evidence as to whether or not it now has been paid. On the other hand the wife was not tested as to whether or not her assertion that that amount is outstanding was accurate. I accept the wife’s evidence and that amount should be added back onto the balance sheet as a liability that the wife has.
Item 61
It was agreed that $20,000 of this amount was used for the purposes of paying legal fees which are otherwise on the balance sheet against the husband. Therefore a liability in the sum of $20,000 should be added to the balance sheet.
Item 62
Exhibit Y evidences that the husband after payment of outstanding cheques, was entitled to a sum of $1,293 and that amount should be added to the balance sheet. At 92.23 US cents, that equates to $1,402.
CONTRIBUTIONS
Initial contributions
The items that the wife had at the commencement of cohabitation are not a matter of dispute. The husband’s position at the commencement of cohabitation was challenged by the wife. Senior counsel for the wife asserted that the husband actually had a technical liability at the commencement of the cohabitation. I do not accept that submission given that the liability was to the husband’s parents and the husband’s mother made it clear that at some point prior to cohabitation, that liability was forgiven. As is clear from the above chronology, the wife’s assets at the commencement of the cohabitation were over $1,000,000. The husband probably had about $215,000.
Earnings during the cohabitation
At paragraph 16 of her affidavit, the wife sets out the income that she earned during the relationship. It was as follows:-
2002 $164,266
2003 $318,179
2004 $363,434
2005 $341,353
2006 $363,434
2007 $291,287
This is to be compared with the husband’s income which is set out at paragraph 18 of the wife’s affidavit:
2003$22,843 from Lane & Associates
2004$41,694 - $40,000 of which was received from Lane & Associates
2005$6,700 from Lane & Associates
2006Nil
2007Unknown
It can be seen that there is a major disparity in the financial contribution made from personal exertion during the period of time the parties were together.
The husband received significant sums from Lane & Associates during the marriage. The husband provided some services for the receipt of this income but I conclude the level of remuneration (for example in the 2004 tax year) which the husband received was not set on an arms length basis. The wife received some tax benefits in diverting income to her husband.
As indicated above, I will initially approach this matter by considering different pools of assets.
Sydney property (Pool 1)
Senior counsel for the husband submitted that the most the husband can say that he directly financially contributed towards the acquisition of the Sydney property would be an amount of $30,000. Senior counsel further submits that his non-financial contributions towards this property were greatly exaggerated as was demonstrated during cross examination and in any event, were trivial in nature. I accept that some of the work that the husband has done may require rectification. During the cohabitation the husband was overseas for a two year period whilst the wife was living in the property. There is no dispute that the wife paid from her own resources the bulk of the initial deposit monies and all of the associated expenses and mortgage repayments since the acquisition of the property. The husband has lived in the property for only about one year and has made no post separation contributions to the property.
The Sydney property is currently worth $950,000 with a mortgage in the wife’s name secured against that property in the sum of $338,469. I assess direct and indirect, financial and non financial contributions to the current equity in the Sydney property as to 90 percent to the wife and 10 percent to the husband.
Wife’s superannuation (Pool 2)
The wife’s superannuation at the commencement of the cohabitation was in the sum of $42,000. It has grown so that the current value of the wife’s superannuation as at date of hearing was $275,749. The wife, through her personal exertions during the period of cohabitation and since the separation, has generated income to enable her to make contributions which have led to a significant increase in the value of her superannuation. The husband can point to the period the parties were together and argue that it was their mutual decision in the partnership of their marriage that the wife would continue to earn her very high income whilst the husband pursued his studies. Along the way he made indirect contributions and the superannuation that was accumulated by the wife could be seen as a joint endeavour of the parties. There is, however, little evidence about this and I find the wife’s superannuation was primarily accumulated as a result of her personal exertion. Looking at the superannuation as an individual asset I would attribute 90 percent of it’s value being contributed by the wife and 10 percent of its value by the husband.
The properties in the United States (Pool 3)
There was a considerable focus at the hearing tracing various movements of funds and conveyancing transactions in the United States. The husband’s mother has, for a long time, been a real estate agent. She encouraged the husband from an early age to develop an interest in real estate and the husband at the date of cohabitation had a half share interest in a property at P4 and a one third interest in two properties in H, known during the hearing as the H2 and the H1 property.
The husband’s interest in the two H properties were credited to him by his parents. The credit was US$100,000. That amount was used by the husband towards acquiring interests in properties known during the hearing as P6 and P7. Counsel for the husband challenged both the husband and the husband’s mother in relation to the assessment of the value of the H properties and how the credit of US$100,000 was divided between the two properties. Given that this was a significant part of the husband’s wealth at the commencement of cohabitation the value of the credit given by the husband’s parents to the husband in relation to these properties is of some significance. I however accept the husband’s mother’s evidence that US$100,000 credit was given to the husband for these properties and that the husband thereafter had the benefit of that credit as new properties were acquired and developed.
P6 property was in turn traded and its sale proceeds went into P8 property. P8 was in turn sold and its sale proceeds went towards the property at P5 and the purchase of a property at P1.
The property at P7 was sold and its sale proceeds went to repay the husband’s parents for monies lent for acquisition of P9.
P9 was sold. What happened to the proceeds of sale was somewhat murky. US$45,000 found its way into an account which only came to light during the husband’s mother’s oral evidence (the BCP account). The balance of what was in that account in the husband’s name has been brought to account in the balance sheet at item 31A. I am prepared to accept that the balance of the proceeds of the sale of P9 went towards development of a property that the parties had purchased at P3 and the development of the property at P1.
The parties, using cash from the wife’s savings and income she earned in Australia, acquired a property at P3 and a property at O.
Cash from Australia was also used to acquire the property at P2.
Some of the details of dates and amounts involved in these transactions are set out in the chronology above.
It was accepted during the trial that applicable revenue law in the United States allows for capital gains which are made on the sale of one property, to be reinvested in another, as long as that transaction is certified by an appropriately qualified attorney and the monies are held in trust by that attorney. This type of transaction is referred to as a “1031 Like-Kind Exchange”, taking its name after the statute which allows it.
The wife’s overall case is that apart from monies that she otherwise used to support the husband, the wife sent monies to the United States for the investment in real estate. The amount the wife originally asserted she sent to the United States was US$643,000 (AUS$863,841.00) as is referred to in paragraph 27 of the wife’s affidavit. Exhibit Z is the wife’s revised reconciliation, based on the Bank of Lakes account, of monies forwarded by her to the United States. She was unable to say where the last two entries ($4,000 and $2,000 on 5 and 6 October 2006) came from but she asserted that the balance of the monies came from her account. The total is US$712,270 sent from her accounts in Australia to the United States. US$285,000 came back (see paragraph 77 of the wife’s affidavit) but was subsequently repaid by the wife to the Husband’s parents (see paragraph 96 above).
The husband disputes that there has not been a proper accounting for the monies. He points to Exhibit X which is an attempt by him to reconcile the monies sent to America. Exhibit X was allowed into evidence as to all but what is contained in the box at the bottom of that page entitled “investment” and the line at the bottom of the page “net funds to invest exceed investment - $22393.00”. That net calculation is otherwise able to be calculated based upon evidence given by the husband (if that evidence is to be accepted).
The figure asserted by the husband that remains to be accounted for in relation to funds sent to the United States as contained in Exhibit X, is in the sum of $405,770.
The following paragraphs of the husband’s affidavit are relied upon by him to assert that the monies sent by him to Australia can be traced into investments in the following properties of the following amounts:
215.1.Paragraphs 224, 225 and 226 of his affidavit evidence an investment in O property in the sum of $58,951.
215.2.Paragraph 228 of his affidavit evidences an investment of $142,926 in the property at P3.
215.3.Paragraph 223 of his affidavit evidences an investment in P10 in the sum of $72,500.
215.4.Paragraphs 243, 244 and 245 evidence an investment of $109,000 in the property at P2.
The husband says that a total of those amounts adds to $383,377, and is a figure close enough to account in a significant way for funds sent to the United States for investment in real estate ($405,770 - $383,377 = $22,393).
It is accurate to say that the current investment in real estate in the United States is of far less value than the original combined value of the monies sent from Australia during the course of the cohabitation and the value of the interest that the husband had in three properties in the United States at the commencement of cohabitation.
There are a number of matters which contribute to that being so but probably the most significant factor accounting for the loss in capital is the decrease in the value of the US properties as a result of market forces. Senior Counsel for the husband submitted that the effect on the price of real estate in the United States as a result of the global financial crisis is notorious. I need not consider whether I can take judicial notice of that. The effect on the value of properties in this case is evidenced by the fact that when the properties were initially valued (see Exhibit B), P5 was valued at $273,438 (US$175,000), P1 was valued at $265,625 (US$170,000) and P2 was valued at $81,250 (US$52,000). Those values were agreed as at 19 February 2009. As at the revaluation of these properties in October 2009, P5 had reduced in value to US$130,000; P1 had reduced in value to US$145,000 and P2 had reduced in value to US$41,000.
In addition, as recorded in the chronology, P2 and O property were both sold with a nett capital loss.
Senior counsel for the wife said it was unclear how the husband used the proceeds of sale from P9 property. This property was sold in July 2005 and the husband received approximately US$151,000 from the proceeds of sale. Senior counsel for the wife submitted that these funds were not used to acquire assets nor did they contribute to any superannuation fund. It was submitted that one must accept that the money was used for the husband’s own benefit, even if it is accepted that US$45,000 was transferred into the BCP account.
The husband’s mother gave evidence that $100,000 of the proceeds of sale of P9 property were transferred to Australia in July 2005 but could not identify any evidence to support this assertion. She said that $16,820 was transferred in August 2006; $84,000 in September 2006 and $5,687 on 3rd October.
Senior counsel for the husband in reply to the concerns raised by senior counsel for the wife referred to paragraph 63 of the husband’s affidavit and to Exhibit U. Paragraph 63 records the sale of P9 property for US $151,594 and says that his interest was thereafter held in trust by his parents. At paragraph 65 the husband indicates that a portion of the proceeds of sale of P9 property was used in the development and construction of the unit of the property known as P1. The husband asserts that $105,000 was used for that purpose. At paragraph 229 of his affidavit the husband says that $45,000 was drawn against the Bank of Lakes account on 21 July 2005 for expenses relating to the development of P3. The distribution of the funds asserted by the husband is corroborated by information in Exhibit U.
Senior counsel for the wife asserted that no faith could be placed upon what was in Exhibit U because the P3 property was acquired in 2004 and P9 was not sold until 2005. That however misses the essence of the evidence of the husband on this point, namely that the monies were used for the development of P3, not the acquisition of P3.
When discussing credit, I have already mentioned the husband made an application to the court for the mortgage shortfall to be paid with funds from the P3 property.
Senior counsel for the wife submitted that the husband had also failed to account for the $20,000 he received from the proceeds of sale from P4 property. Exhibit P, an email from the husband to the Bank of Lakes, was tendered on behalf of the husband to support his assertion that the money was transferred to a Citibank account. I find, however, that what the wife has said at paragraph 12 adequately explains what happened to the $20,000.
The property P6 was sold in March 2003. The husband received approximately US$84,000 from the proceeds of sale which were then rolled over into P8 property. In 2005, P8 was sold and the husband received US$445,000 from the proceeds of sale. $300,000 was subsequently used to purchase P5 property from the husband’s parents and the remaining funds were used to purchase P1. Senior counsel for the wife submitted that these purchases did not produce anything tactile for the husband and that the assets had to be viewed in light of the fact that without the wife’s initial financial contribution to P8, these properties could not have been purchased.
The P3 property was acquired using a substantial contribution by the wife. When the property was sold the available funds were depleted when they were used to pay the shortfall on the O property mortgage. The wife complains and says the mortgage could have been alleviated using the proceeds of sale from P9 property. There is insufficient evidence to allow me to hold the husband solely responsible for what happened to the O property.
The husband did not account for the receipt of rental monies from the O property. Two rooms were rented out in this property by the husband, one in January 2005 for US$650 per month and the other in January 2006 for US$450 per month. The husband had the benefit of these rental monies at the same time that the wife was paying all costs associated with the property.
There is some doubt as to the accuracy of some of the husband’s assertions regarding the movement of monies in relation to the various real estate ventures. Some assertions could not be supported by documentary evidence and the evidence of the husband and his mother was, at times, conflicting. Overall, however, I am not of the view that there are significant assets about which the husband has not made a disclosure.
The Full Court in Browne & Green (1999) FLC 92-873 agreed with the proposition that “contributions by a party do not necessarily need to produce a result for that party’s contributions which fall within paragraph 79(4)(a) and (b) of the Family Law Act 1975 to be taken into account”. The Full Court in that case, however, went on to point out that a practical difficulty arises in recognising contributions to property which may no longer exist if the overall pool of property ultimately available for division between the parties has been reduced by the absence of the property previously in existence. In that context the Court needs to turn its mind to the question of whether one party, or alternatively both parties, should as a matter of justice and equity bear the financial loss. That consideration in turn is governed by the well-known principles expressed by Baker J in Kowaliw (1981). In this case it has not been established that the husband embarked on a course of conduct to reduce the value of matrimonial assets or that he has acted recklessly, negligently or wantonly.
Looking at what is now left of the real estate in the United States, it is difficult to make any precise assessment as to what proportion both parties contributed to it given the history that is detailed above. Using pseudo mathematics, it might be inferred that the husband initially contributed around US$160,000 (US$60,000 from P4 and US$100,00 from the H properties) and the wife from funds provided by her, contributed over US$700,000. This is inexact because amounts were introduced at different times. The husband also had cash savings at date of cohibation but there is no clear evidence that those monies went towards real estate in the United States. This analysis would produce a rough percentage as to 81% to the wife and 19% to the husband. I think a 80/20 split in the wife’s favour is a fair result taking into account all facts relating to contributions towards the United States properties.
The NAB account - $102,806 (Pool 4)
There is currently a $102,806 in an NAB account. The source of those funds are the proceeds of the sale from P3 property. Given the previous discussion in relation to contributions towards the US properties I see no reason why not to adopt the finding I have just made in relation to those properties given that the monies from the NAB account came from those properties. Accordingly I find that contributions to the NAB account were as to 80% to the wife and 20% to the husband.
Other Assets (Pools 5 and 6)
For the purposes of attempting to analyse the matter on an asset by asset basis, all other assets and liabilities will be divided into two pools depending on who owns or owes them today and contributions to those assets and liabilities will be assumed to be 100 per cent by the parties who currently holds those assets or liabilities. I note this has the consequence on an asset by asset analysis of finding the wife having made all the contributions to the payment of her legal fees.
Conclusion on an asset by asset approach
The assets would be divided up into the following pools:
Pool 1
Assets
Title
Description
Value
W
Sydney property
$950,000
Total assets
$950,000
Liabilities
Title
Description
Value
W
Mortgage: St George Bank Ltd
$338,469
Total liabilities
$338,469
Total net assets
$611,531
Pool 2
Assets
Title
Description
Value
W
Unisuper
$275,749
Total assets
$275,749
Pool 3
Assets
Title
Description
Value
H
P5 property (US $130,000)
$140,952
H
P1 property (US $145,000)
$157,216
H
Land at P2 (US $41,000)
$44,454
Total assets
$342,622
Liabilities
Title
Description
Value
H
Mortgage over P1 property
$154,108
Total liabilities
$154,108
Total net assets
$188,514
Pool 4
Assets
Title
Description
Value
H
NAB account …236
$102,806
Total assets
$102,806
Pool 5
Assets
Title
Description
Value
H
Vespa GTV 250 2007 motorcycle
$6,550
H
Australian Citibank account (balance of proceeds of sale of P3
$76
H
US Bank of Lakes account no. …702 (US $15)
$0
H
US Bank of the Lakes account No. 499250703 (US $15)
$3,138
H
USA Bank of the lakes account No. …704 (US $2,821)
$0
H
USA ING Direct (US $1)
$0
H
Australian ING Direct
$5
H
USA Citibank account …613
$233
H
NAB account …844
$76
H
NAB account …154
$473
H
Furniture and effects and personal property (including jewellery)
$8,642
H
Husband's interest in his parent's trust
$0
H
Husband's Bank of Lakes account
$0
H
Interest in Wharton Recovable
$0
H
Bank of Lakes Account BCP US $17,649
$21,264
H
Citibank mastercard as at separation paid by wife
$8,371
H
USA Bank of Lakes account No. …701 (USA $7,574)
$9,125
H
USA Bank of Lakes account No. …122
$0
H
USA Citibank No. …801
$0
H
USA ING
$0
H
Australian ING
$0
H
Paid legal fees
$153,122
H
Monies held in solicitor's trust account
$37,400
H
Amount held in USA account in husband's name from wife's transfers
$0
H
50% of rental payments received by husband from USA properties
$0
H
Savings at separation
$0
H
50% rent received by husband from USA properties (US $77,000)
$0
H
Unisuper
$2,111
H
AXA Australia
$13,010
Total assets
$263,596
Liabilities
Title
Description
Value
H
Citibank Mastercard
$0
H
Loan from husband’s parents
$20,000
H
Outstanding cheques against Bank of the Lakes
$1,402
Total liabilities
$21,402
Pool 6
Assets
Title
Description
Value
W
Audi TT 2000
$19,650
W
Golf Volkswagen 2004
$13,150
W
St George No. …155
$500
W
USA Citibank
$0
W
USA Citibank account 4559 (US 991)
$1,113
W
USA Citibank account 4575 (US $699)
$785
W
Furniture and effects and personal property (including jewellery)
$30,499
W
Shares in Lane & Associates Pty Limited
$0
W
Income receivable from US University
$0
W
Loan to Lane & Associates P/L
$12,914
W
Interest in Lane & Associates P/L
$34,117
W
Balance St George no. …155 at separation $12,536 less now $7,018
$0
W
Paid legal fees
$169,918
W
Monies held in solicitor's trust account
$10,000
W
Expenses updating Sydney unit
$0
W
Jewellery purchased since valuation
$0
W
Strata fees, utilities and maintenance expenses of O property
$0
W
Mortgage repayments on O property
$0
Total assets
$292,646
Liabilities
Title
Description
Value
W
Citibank Mastercard
$12,569
W
Citibank Visa
$0
W
Unpaid tax
$18,017
W
Loan from G Lane
$22,222
Total liabilities
$52,808
Total net assets
$239,838
Total net assets over all pools
$ 1,660,632
Adopting six pools and applying the percentages which I have discussed above, the following table indicates what the overall percentage split of all assets would be based on an assessment of contributions on an asset by asset basis.
% based on contributions
Pool
H total
W total
Asset totals
Liability totals
1
10/90 $61,153
$550,378
$950,000
$338,469
2
10/90 $27,575
$248,174
$275,749
$0
3
20/80 $37,703
$150,811
$342,622
$154,108
3
20/80 $20,561
$82,245
$102,806
$0
5
100/0 $242,194
$0
$263,596
$21,402
6
0/100 $0
$239,838
$292,646
$52,808
$389,186
$1,271,446
$2,227,419
$566,787
H
W
23.4%
76.6%
As can be seen this produces a result when looking at the assets overall of a 76.6 percentage division in favour of the wife and a 23.4 percentage division in favour of the husband.
Using a global approach to check the asset by asset assessment of contributions
There is an argument that a global approach is more appropriate in this case. Probably I cannot assume, as I have in the asset by asset analysis carried out above, that the whole of the remaining assets (pool 5) in the husband’s name were sourced by him without assistance by the wife. The other strong argument for adopting a global approach is that the fate of what has happened to the real estate in Australia as opposed to the real estate in the United States means that the fact that the wife is ascribed a 90 percent contribution to the Australian property and an 80 percent contribution to the American properties leads to an inaccurate analysis. In this case there was a substantial intermingling of the wife’s money into ventures undertaken by the husband in the United States. Basically the parties have contributed about US$860,000 towards property in the United States. At the end of the day what they have to show for that investment is property worth US$316,000 ($130,000 + $145,000 + US$41,000) compared to the US$860,000 invested. Both Sydney and the current properties in the United States were acquired during the time the parties were together and to some extent, the acquisition of those properties were joint investment decisions, notwithstanding the fact that the wife selected the Sydney property and the wife placed her funds in the hands of the husband and his mother for the purposes of investing in real estate in the United States without having any detailed knowledge about how that was being managed. The result on an asset by asset basis would have been different had the properties in the United States increased or maintained their value and the Australian property had fallen to the extent that the US properties had fallen. There is no evidence to indicate otherwise than what has happened in relation to variation in property prices in real estate in the two countries was outside the control of the parties and was a result of market forces. I accept the argument that I should not focus upon individual assets and the sources that monies came from to acquire and maintain individual assets but rather to take a more global approach.
Conclusions in relation to contributions
It is clear that the wife made the overwhelming initial financial contributions. It is also clear that the wife made the overwhelming financial contributions generated from personal exertion during the cohabitation. There is no doubt that money earned from the wife’s personal exertion during the marriage played a significant part in maintaining and increasing the value of the assets that the parties had at the end of the cohabitation.
The wife has also made a significant contribution towards the husband’s ability to generate income in the future by supporting him over a five year period as a person who was studying on and off throughout that period at universities.
Neither counsel during final submissions made any reference to what an appropriate overall percentage division should be based upon the contributions of the parties except for a vague reference in a discussion initiated by me with senior counsel for the wife, that on the wife’s case it might be in excessive 90 percent in her favour. In part, the reason for the lack of any mathematical calculation arose from how the balance sheet was developed during the trial and the state of the balance sheet at the end of the evidence (which included uncertain values in respect of the US properties given that both counsel had agreed that I would carry out a calculation based on the US exchange rate as at the date of the delivery of the judgment).
As I have said above, analysis based on a multiple pool approach leads to an overall result of 76.6 percent to the wife and 23.4 percent to the husband.
If I stood back and took a global approach to everything that has happened during this relationship, I would assess the wife’s contribution to assets at 80 percent and the husband’s contribution as 20 percent. I conclude that notwithstanding the shortness of the marriage a global approach leads to a more just assessment of contributions in this case. I consequently assess contributions to the net assets of both parties 80/20 to the wife.
SECTION 79(4)(d) - (g) MATTERS
The wife is 43 years of age, the husband is 46 years of age.
Both parties are in good health.
The wife is a successful woman who has worked diligently. She is a high income earner and has the capacity in the future to continue to generate a high income.
The husband is highly qualified but to date that qualification has not been productive of any significant income generation. He has not worked full time for nine years. He has relied upon support from the wife during the time that they were together.
The husband gave evidence that it was his intention to seek employment as an academic in the fullness of time. I reached the conclusion that it is unlikely that the husband will ever achieve the earning capacity that the wife has already demonstrated over a significant period and the wife’s ability to regenerate her capital in the future will be far superior to that of the husband’s
The husband has generated capital losses in the United States which may be some benefit to him in the future if for example he joins, as he has in the past, with his parents in the endeavour of generating wealth through investment in real estate (provided that gains are made in that future endeavour).
Neither party receives a pension.
The husband is now financially associated with Ms T. Ms T sat in the back of the court room throughout the trial. The husband did not file any evidence from Ms T, notwithstanding the husband is cohabiting with Ms T. Some information has been gleaned about the financial circumstances relating to that cohabitation. Ms T earns about $550 per week. She has, like the wife in this case before her, supplied work to the husband. That work was sufficient for him to be able to purchase his scooter. I accept senior counsel’s for the wife’s submission that more information about Ms T’s financial position should have been given. It appears that the husband, each second month, contributes $1,000 towards mortgage payments on the property in which he currently lives. That property is registered in Ms T’s name. The husband in his evidence indicated that he thought that property was held in trust by Ms T for her mother. There was however no opportunity to test whether or not that was accurate. At the end of the evidence, the full nature and extent of the husband’s financial relationship with Ms T was unclear. I think however, it is probable safe to infer that the husband has not made any significant financial contributions to the assets held by Ms T.
There is no evidence the wife is cohabiting with any person.
Senior counsel for the husband in final submissions did not suggest that an adjustment should be made to continue to support the husband’s style and standard of living which over the last decade has been that of a professional student.
It was agreed by the parties that the parties’ respective superannuation entitlements be treated as if it were property. There is of course a significant disparity in the superannuation held by each of the parties but that is more appropriate considered in the context of a general discussion in relation to the disparity of assets between the parties
The parties cohabited for five years. I raised with senior counsel for the wife whether or not the husband was entitled to an adjustment arising out of the disparity in the property of each of the parties that arises from contribution findings already made above. He submitted that the husband should not be allowed to profit simply because the wife has more assets. As discussed earlier, the authorities indicate that a huge difference between the parties’ assets has to be balanced against the circumstances in this case of a relatively short marriage with no children. I accept the proposition that there does not have to be a connection between the capital positions of the parties and the life of the marriage before weight can be placed upon a disparity in the financial positions of the parties in the balancing exercise. The extent of this disparity will result in me making an adjustment .
The husband and his mother were also cross-examined about whether or not the Wharton Trust provided a financial resource to the husband. The husband’s mother’s evidence, which I accept, is that she and her husband were considering abolishing the Trust altogether. It was not controversial that the husband had been removed as an Alternate Successor Trustee in or about March 2007 following the separation of the parties. The husband’s mother candidly indicated that the motivation of her and her husband for doing that was the separation itself. The Wharton Trust is clearly the alter ego of the husband’s mother and father. There is no indication that the husband will obtain any benefits from that Trust in the foreseeable future. It is probable that the husband will inherit one half of his parents’ estate if he survives them but in the facts of this case I give that expectancy no weight.
Conclusions in relation to s 79(4)(d) - (g) matters
Having regard to the discussion above, I find that the husband is entitled to a further adjustment of 2.5 percent in relation to factors set out in s 79(4)(d) -(g) FLA.
JUST AND EQUITABLE
The orders sought by the wife would, on a global basis, produce a division of assets as to 85.2 percent to herself and 14.8 percent to the husband. That is demonstrated by the following table:
H gets - 14.8%
Assets
Item No.
Description
Percentage
Value
3
P1 property (US $145,000)
100%
$157,216
7
Vespa GTV 250 2007 motorcycle
100%
$6,550
8
Australian Citibank account (balance of proceeds of sale of P3 property
100%
$76
9
US Bank of Lakes account no. …702 (US $15)
100%
$0
10
US Bank of the Lakes account No. …703 (US $15)
100%
$3,138
11
USA Bank of the lakes account No. …704 (US $2,821)
100%
$0
12
USA ING Direct (US $1)
100%
$0
13
Australian ING Direct
100%
$5
18
USA Citibank account …613
100%
$233
19
NAB account …844
100%
$76
20
NAB account …154
100%
$473
24
Furniture and effects and personal property (including jewellery)
100%
$8,642
26
Husband's interest in his parents' trust
100%
$0
31A
Bank of Lakes Account BCP US $17,649
100%
$21,264
33
Citibank mastercard as at separation paid by wife
100%
$8,371
34
USA Bank of Lakes account No. …701 (USA $7,574)
100%
$9,125
40
Paid legal fees
100%
$153,122
42
Monies held in solicitor's trust account
100%
$37,400
44
50% of rental payments received by husband from USA properties
100%
$0
51
Unisuper
100%
$2,111
52
AXA Australia
100%
$13,010
Liabilities
Item No.
Description
Percentage
Value
55
Mortgage over P5 property
100%
$154,108
58
Citibank MasterCard
100%
$0
61
Loan from husband’s parents
100%
$20,000
62
Outstanding cheques against Bank of the Lakes
100%
$1,402
Net Assets
$245,302
W gets - 85.2%
Assets
Item No.
Description
Percentage
Value
1
Sydney property
100%
$950,000
2
P5 property (US $130,000)
100%
$140,952
4
Land at P2 (US $41,000)
100%
$44,454
5
Audi TT 2000
100%
$19,650
6
Golf Volkswagen 2004
100%
$13,150
14
St George, No. …155
100%
$500
16
USA Citibank account 4559 (US 991)
100%
$1,113
17
USA Citibank account 4575 (US $699)
100%
$785
21
NAB account …236
100%
$102,806
22
Furniture and effects and personal property (including jewellery)
100%
$30,499
25
Shares in Lane & Associates Pty Limited
100%
$0
28
Income receivable from US University
100%
$0
29
Loan to Lane & Associates P/L
100%
$12,914
30
Interest in Lane & Associates P/L
100%
$34,117
39
Paid legal fees
100%
$169,918
41
Monies held in solicitor's trust account
100%
$10,000
53
Unisuper
100%
$275,749
Liabilities
Item No.
Description
Percentage
Value
54
Mortgage: St George Bank Ltd
100%
$338,469
56
Citibank MasterCard
100%
$12,569
57
Citibank Visa
100%
$0
59
Unpaid tax
100%
$18,017
60
Loan from G Lane
100%
$22,222
Net Assets
$1,415,330
Based on the distribution on the husband’s application, the division on a global basis would be 70.5 percent to the wife and 29.5 percent to the husband. That calculation is supported by the following table:
H gets - 29.5%
Assets
Item No.
Description
Percentage
Value
2
P5 property (US $130,000)
100%
$140,952
3
P1 property (US $145,000)
100%
$157,216
7
Vespa GTV 250 2007 motorcycle
100%
$6,550
8
Australian Citibank account (balance of proceeds of sale of P3 property
100%
$76
9
US Bank of Lakes account no. …702 (US $15)
100%
$0
10
US Bank of the Lakes account No. …703 (US $15)
100%
$3,138
11
USA Bank of the lakes account No. …0704 (US $2,821)
100%
$0
12
USA ING Direct (US $1)
100%
$0
13
Australian ING Direct
100%
$5
18
USA Citibank account …613
100%
$233
19
NAB account …844
100%
$76
20
NAB account …154
100%
$473
21
NAB account …236
100%
$102,806
24
Furniture and effects and personal property (including jewellery)
100%
$8,642
26
Husband's interest in his parents' trust
100%
$0
31A
Bank of Lakes Account BCP US $17,649
100%
$21,264
33
Citibank mastercard as at separation paid by wife
100%
$8,371
34
USA Bank of Lakes account No. …701 (USA $7,574)
100%
$9,125
40
Paid legal fees
100%
$153,122
42
Monies held in solicitor's trust account
100%
$37,400
44
50% of rental payments received by husband from USA properties
100%
$0
51
Unisuper
100%
$2,111
52
AXA Australia
100%
$13,010
Liabilities
Item No.
Description
Percentage
Value
55
Mortgage over P5 property
100%
$154,108
58
Citibank MasterCard
100%
$0
61
Loan from husband’s parents
100%
$20,000
62
Outstanding cheques against Bank of the Lakes
100%
$1,402
Net Assets
$489,060
W gets - 70.5%
Item No.
Description
Percentage
Value
1
Sydney property
100%
$950,000
4
Land at P2 (US $41,000)
100%
$44,454
5
Audi TT 2000
100%
$19,650
6
Golf Volkswagen 2004
100%
$13,150
14
St George, No. …155
100%
$500
15
USA Citibank
100%
$0
16
USA Citibank account 4559 (US 991)
100%
$1,113
17
USA Citibank account 4575 (US $699)
100%
$785
22
Furniture and effects and personal property (including jewellery)
100%
$30,499
25
Shares in Lane & Associates Pty Limited
100%
$0
28
Income receivable from US University
100%
$0
29
Loan to Lane & Associates P/L
100%
$12,914
30
Interest in Lane & Associates P/L
100%
$34,117
39
Paid legal fees
100%
$169,918
41
Monies held in solicitor's trust account
100%
$10,000
53
Unisuper
100%
$275,749
Liabilities
Item No.
Description
Percentage
Value
54
Mortgage: St George Bank Ltd
100%
$338,469
56
Citibank MasterCard
100%
$12,569
57
Citibank Visa
100%
$0
59
Unpaid tax
100%
$18,017
60
Loan from G Lane
100%
$22,222
Net Assets
$1,171,572
Based upon my findings in relation to contributions and s 79(4)(d) - (g) FLA factors, the adjustment of the net property of the parties would be 77.5% to the wife and 22.5% to the husband.
This result can be achieved by distributing the assets in the following manner:
H gets - 22.5%
Assets
Item No.
Description
Percentage
Value
3
P1 property (US $145,000)
100%
$157,216
7
Vespa GTV 250 2007 motorcycle
100%
$6,550
8
Australian Citibank account (balance of proceeds of sale of P3 property
100%
$76
9
US Bank of Lakes account no. …702 (US $15)
100%
$0
10
US Bank of the Lakes account No. …703 (US $15)
100%
$3,138
11
USA Bank of the lakes account No. …704 (US $2,821)
100%
$0
12
USA ING Direct (US $1)
100%
$0
13
Australian ING Direct
100%
$5
18
USA Citibank account …613
100%
$233
19
NAB account …844
100%
$76
20
NAB account …154
100%
$473
21
NAB account …236
100%
$102,806
24
Furniture and effects and personal property (including jewellery)
100%
$8,642
26
Husband's interest in his parents' trust
100%
$0
31A
Bank of Lakes Account BCP $17,649
100%
$21,264
33
Citibank mastercard as at separation paid by wife
100%
$8,371
40
Paid legal fees
100%
$153,122
44
50% of rental payments received by husband from USA properties
100%
$0
51
Unisuper
100%
$2,111
52
AXA Australia
100%
$13,010
34
USA Bank of Lakes account No. 4…701 (USA $7,574)
100%
$9,125
42
Monies held in solicitor's trust account
100%
$37,400
Liabilities
Item No.
Description
Percentage
Value
55
Mortgage over P5 property
100%
$154,108
58
Citibank MasterCard
100%
$0
61
Loan from husband’s parents
100%
$20,000
62
Outstanding cheques against Bank of the Lakes
100%
$1,402
H receives
$25,534
Net Assets
$373,642
W gets - 77.5%
Assets
Item No.
Description
Percentage
Value
1
Sydney property
100%
$950,000
2
P5 property (US $130,000)
100%
$140,952
4
Land at P2 (US $41,000)
100%
$44,454
5
Audi TT 2000
100%
$19,650
6
Golf Volkswagen 2004
100%
$13,150
14
St George, No. …155
100%
$500
16
USA Citibank account 4559 (US 991)
100%
$1,113
17
USA Citibank account 4575 (US $699)
100%
$785
22
Furniture and effects and personal property (including jewellery)
100%
$30,499
25
Shares in Lane & Associates Pty Limited
100%
$0
28
Income receivable from US University
100%
$0
29
Loan to Lane & Associates P/L
100%
$12,914
30
Interest in Lane & Associates P/L
100%
$34,117
39
Paid legal fees
100%
$169,918
41
Monies held in solicitor's trust account
100%
$10,000
53
Unisuper
100%
$275,749
Liabilities
Item No.
Description
Percentage
Value
54
Mortgage: St George Bank Ltd
100%
$338,469
56
Citibank MasterCard
100%
$12,569
57
Citibank Visa
100%
$0
59
Unpaid tax
100%
$18,017
60
Loan from G Lane
100%
$22,222
W pays H
$25,534
Net Assets
$1,286,990
Standing back, I find that a distribution of assets and liabilities in accordance with the table set out in the preceding paragraph is a just and equitable adjustment of assets and liabilities between the parties.
I certify that the preceding two hundred and sixty-one (261) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts.
Associate:
Date: 21 January 2010
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