Larios and Jergens

FEDERAL CIRCUIT COURT OF AUSTRALIA

LARIOS & JERGENS

[2019] FCCA 2391

Catchwords:
FAMILY LAW – Property – short marriage – no children – wife contributed entirety of her property at cohabitation to purchase family home – whether parties intended husband’s half interest in an investment property should remain his sole property or form part of the marital property at cohabitation – whether money held in joint bank account was marital property - whether parties intended that purchase of the second half of husband’s investment property with funds from joint account should be purchased for the husband’s sole benefit or form part of the marital property – assessment of contributions – adjustment of property interests. Held: money held in joint bank account is joint marital property - husband’s entire investment property forms part of marital property – property interests adjusted.

Legislation:

Family Law Act 1975, ss.75(2),78, 79, 117

Cases cited:

Grant & Williams [2010] FamCA 1074

Applicant:

MS LARIOS

Respondent:

MR JERGENS

File Number:

SYC 3054 of 2017

Judgment of:

Judge Bruce Smith

Hearing date:

3 September 2018

Date of Last Submission:

3 September 2018

Delivered at:

Sydney

Delivered on:

28 August 2019

REPRESENTATION

Counsel for the Applicant:

Mr Wong

Solicitors for the Applicant:

Horton Rhodes Legal

Respondent:

In person

ORDERS

That within 42 days the Husband pay to the wife the sum of AUD$69,500.
That the parties do all things and sign all documents necessary for the husband to transfer to the wife his entire interest in the property at Street A, Suburb B in the State of New South Wales being the whole of the property comprised in Folio Identifier … (“the Street A, Suburb B property”) as follows:
2.1 Within 14 days, the parties do all things necessary to sign the Transfer for the Street A, Suburb B property, the discharge of mortgage document(s), and any other documents necessary to facilitate the transfer of the Street A, Suburb B property to the Wife; and
2.2 Within 42 days, the wife do all things necessary to refinance the loan to the parties from Westpac Banking Corporation secured by mortgage over the Street A, Suburb B property into her sole name.
In the event that the husband fails to comply with Order 1, the husband must, within a further 42 days, do all things and sign all documents necessary to sell the property at City C, London, England (“the London property”) at market value using a recognised real estate agent.
If the London property is not sold within 90 days under Order 3, it is to be listed for auction within 14 days with a reserve price of an amount equal to the approximate total of the amounts at Orders 5.1 to 5.6.2 inclusive.
That the sale proceeds of the London property be distributed as follows:
5.1 In payment of any monies required to discharge the loan secured by mortgage over the London property;
5.2 In payment of the sales agent’s fees and commission/marketing expenses of the sale;
5.3 In payment of the reasonable legal costs concerning the sale;
5.4In reimbursement to the husband and/or the wife of any upfront marketing expenses for the sale;
5.5In payment of taxes (if any) arising from the sale, and any statutory or other charges running with the land; and
5.6In payment of the balance in the following order and priority:
5.6.1To the wife the sum at Order 1 plus interest pursuant to the Family Law Rules 2004 (Cth) from the date of default to the date of payment;
5.6.2To the wife the sum required to reimburse the Wife for her legal fees associated with any enforcement of the Orders; and
5.6.3In payment of the balance to the husband.

That the payments referred to in Orders 5.1 to 5.5 inclusive be supported by properly constituted invoices for each of those payments respectively and such invoices be provided to the wife in advance of such payments being made.
That pending the husband’s compliance with these Orders (to be confirmed by the wife), the registrar under the Land Registration Act 2002 (UK) enters a restriction over the whole of the property at City C, London, England, on behalf of the wife, to prevent a disposition or the registration of a disposition of the property by the husband as sole proprietor.
That subject to these Orders, the husband retain all other assets in his ownership, possession and/or control including but not limited to:
8.1 All funds held by him in financial institutions;
8.2 The home contents and items in the husband’s residential property;
8.3 His superannuation entitlements; and
8.4 All other assets.

That subject to these Orders, the wife retain all other assets in her ownership, possession and/or control including but not limited to:
9.1All funds held by her in financial institutions;
9.2The home contents and items in the Street A, Suburb B property;
9.3Her superannuation entitlements;
9.4All other assets.
That subject to these Orders, the husband indemnify the wife for all liabilities in his name.
That subject to these Orders, the wife indemnify the husband for all liabilities in her name.
That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, the Registrar of the Court be appointed pursuant to Section 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
That costs are reserved.
13.1If either party seeks costs they are to file an Application within 28 days.
13.2If no Application for costs is filed by any party within 28 days there will be no order as to costs.

IT IS NOTED that publication of this judgment under the pseudonym Larios & Jergens is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 3054 of 2017

MS LARIOS

Applicant

And

MR JERGENS

Respondent

REASONS FOR JUDGMENT

A. Introduction

i. Background

These proceedings are competing applications for the adjustment of property interests pursuant to s.79 Family Law Act 1975 (Cth) (“the Act”) between the Applicant Ms Larios (“the wife”) aged 31 and the Respondent Mr Jergens (“the husband”) aged 38.
The wife is Australian. The husband is English. They are both professionals. The husband commenced living in Sydney, Australia in late … 2012 when he took up a position as a professional at Employer E where the wife was working. Employer E is a leading company. At that time he was living with his then partner Ms D.
The parties met on about … 2012. They commenced cohabitating on … 2013. The wife was then 25 and the husband 31. They married on … 2016. They finally separated on 31 July 2016. The relevant period of cohabitation was 3 ½ years. The husband subsequently returned to London in about … 2017. The wife remains in Sydney. Each party continues to work as a professional. There are no children of the marriage.
The proceedings commenced on 22 May 2017. The wife was legally represented throughout. The husband was legally represented from 23 June 2017 to 14 March 2018. The husband elected to represent himself thereafter, including as his own advocate at Hearing.
At hearing the parties owned two items of real property:
a)City C, London, UK, (“the London property”), and,
b)Street A , Suburb B, NSW (“the Street A, Suburb B property”).
These properties constituted the majority of the parties property interests.

ii. The London property

At cohabitation the husband was the sole legal owner of the London property. He had a 50% beneficial interest in the London property. His former partner Ms D was entitled to the other 50%.
The husband’s case is that while the wife brought 70% of the assets to the relationship for their joint use, the parties agreed that the part of the London property he then owned would remain for his sole benefit and would not be a contribution by him to the marriage. The wife disagrees.
Further, during the relationship the husband purchased Ms D’s 50% beneficial interest. As the husband could not finance the purchase himself he used monies from a joint bank account into which the parties paid most of their respective salaries (“the joint account”). This was done with the wife’s consent. The husband’s case is that the parties agreed that, even though money from their joint account was used to purchase this second half of the London property, it would also remain solely his and would not form part of the marital property. The wife disagrees.
The husband’s case is that the London property should be considered as a separate property pool which should be allocated 100% to the husband and not otherwise taken into account. Not even the portion purchased using monies from the joint bank account. The wife disagrees.
The manner in which the parties dealt with the London property is the major factual issue in the case. The resolution of that issue will be the principal factor determining the decision as to any property adjustments.

iii. The Street A, Suburb B property

During the relationship the parties purchased the Street A, Suburb B property in their joint names. This purchase was financed using $155,000 or 100% of the wife’s then net assets and $11,000 or 17% of the husband’s net assets, and otherwise by a mortgage. The wife funded 93.4% and the husband 6.4% of the sum paid by them. The parties both agree that this property must be considered as joint marital property.

iv. Valuation and financial information

The parties managed to agree on the majority of the valuations of the property held by each party. That agreement included property at cohabitation and at hearing. There were some areas of disagreement around chattels.
The parties also agreed, broadly, about the quantum of financial contributions made throughout cohabitation.
The figures and percentages are set out in detail in this Judgment. The parties have calculated many items to the cents. Where appropriate this Judgment will round figures.
While establishing these valuations and the extent of financial contributions was in many cases necessary, and in other’s very helpful, it is important to recognise that this Court is engaged in a determination of what is just and equitable in the context of a marriage pursuant to s.79 of the Act, and not a tracing exercise in a commercial cause.

B. Cohabitation

The parties agreed on the assets and liabilities, superannuation and financial resources by way of a UK pension each party brought to the relationship at cohabitation.

i. Agreed assets and liabilities

At cohabitation the wife had savings of approximately $130,000, shares worth approximately $4,481, and a car worth approximately $16,000. She had no liabilities. In summary, it was agreed that the wife had approximately $150,000 in assets.
The husband was the sole legal owner of the London property and the sole mortgagor. However, he held 50% of the London property on trust for the benefit of his former partner, Ms D, who had contributed to the purchase and ongoing payments of the mortgage. The parties proceeded on the basis that the husband’s interest in the London property at cohabitation was equal to the value of his 50% beneficial interest.
Consistent with the parties approach, for ease of reference only and while recognising that the husband at all times was the sole legal owner of the London property, this Judgment will deal with the London property by referring to the 50% beneficial interest owned by the husband at cohabitation as the “first half” of the London property, and to Ms D’s 50% beneficial interest which was subsequently acquired as the “second half” of the London property.
At cohabitation the value of the London property was $396,072 with a mortgage of approximately $312,608. The first half of the London property was therefore worth $198,036 and 50% of the mortgage was $156,304. On that basis the husband’s net equity in the first half of the London property was $41,732.
The husband also had approximately $8,371 in savings, and a car worth approximately $18,000 subject to a car loan of $4,500. It was agreed the husband had approximately $63,600 in net assets.
In summary, the parties had combined net assets excluding superannuation of $213,600 to the relationship, the wife brought approximately $150,000 or 70% and the husband approximately $63,600 or 30% of the net assets. The majority of the husband’s assets were in the London property.
Excluding the London property from consideration, as the husband submits the Court should do, the wife brought approximately 87% and the husband approximately 13% of the assets to the relationship.

ii. Superannuation

The wife had $16,917 and the husband $1,584 in superannuation.

iii. Husband’s UK pension

The husband also had a future financial resource by way of an interest in UK pension funds, then valued at $59,469.

C. Hearing

i. Agreed assets and liabilities

The parties agreed on the valuation of the great majority, but not all, of the assets and liabilities, superannuation and financial resources by way of a UK pension each party held at hearing.

a. Real property

In September 2017 the jointly owned Street A, Suburb B property was valued at $900,000. It was subject to a mortgage of $519,427.35. There was a net equity of $380,572.65.
At hearing it was agreed the value remained at $900,000 but that the mortgage had been paid down by approximately $10,000 to $509,522.16 and that the net equity was $390,477.84.
On that basis as joint legal owners with joint liability for the mortgage each party had an interest of $450,000 and after the mortgage a net interest of approximately $195,239.
At hearing the London property, both first and second half together, had a value of $668,160 with a mortgage of approximately $292,081 and an agreed net equity of approximately $376,079.
The net equity in each property was relatively similar.
The wife asserts an interest in the London property. The husband denies this. For reasons set out below, I find that the wife had a 50% interest in the second half of the London property by reason of that property being purchased with monies from the parties joint bank account. On that basis I find that while the husband is the sole legal owner of the London property, he holds it subject to the wife’s beneficial interest as to 25% of the London property.
The wife’s beneficial interest of 25% of the value of the London property is worth $167,040 gross and approximately $94,020 net. The husband’s 75% beneficial interest is worth $501,120 gross and approximately $288,060 net.

b. Cash, shares and credit card debt

The wife had just over $4,617 in cash. She had credit card debts of just on $3,480. That was a liquid asset and credit card net position of $1,137.
The husband had just over $13,400 cash with $14,900 in additional shares. He had credit card debts of just under $1,000.00. That was a liquid asset and credit card net position of $27,300.

ii. Asset values not agreed

a. Household contents and wedding gifts

The husband valued the wife’s household contents at $10,000. The wife valued these items at $800 depreciated value.
The husband also contended that the wife retained engagement and wedding gifts valued at $15,000. The wife says some of the gifts were taken by the husband and otherwise attributes no value to these.
The husband valued his own household contents at $26,100. The wife accepted this valuation.
Doing the best I can given the nominal evidence lead on the issue by the parties and the absence of detailed submissions, I find the wife’s household contents to be worth approximately $10,000. This is on the basis that the husband’s valuation of his household contents does not take the same approach as the wife’s, which is that standard second hand furniture has no real market value, and similar approaches should be adopted.
I find that the wife probably retained some gifts which, doing the best I can on the evidence available, I estimate to be worth $10,000, noting that I take into account the dispute as to whether the husband took some of the gifts.
In summary the husband has household contents worth $26,100 and the wife has household contents and retained wedding gifts worth $20,000.

iii. “Add backs”

a. Matrimonial assets disposed of or used up post separation

The parties alleged different “add backs” to be taken into account as matrimonial property retained and used by the other party.
The husband alleges that the wife retained $27,375 from their joint bank account upon separation. He also alleges she retained refunds of $2,710 for the wedding photographer and $1,560 for a cruise paid on … 2016, which were originally paid from that joint account.
The wife contents that she retained $19,840, which was the balance of the joint savings account. She also alleged that it needed to be discounted by the $7,535 credit card debt on the credit card the parties used jointly prior to separation which was customarily repaid from the joint account. On the wife’s case the figure would be $12,305.
As the husband bears the evidentiary onus, and it is not clear to me that his case is established, I will accept the wife’s evidence by way of a concession on this issue.
The wife contends that these amounts should not be considered as they are included in her bank balances. That is a difficult argument to mount given she does not have that much in her account, the amount she has is almost entirely offset by credit card debt, and most importantly given she has been working in the years since that time.
The joint bank account, discussed in detail below, was joint matrimonial property to which both parties contributed. The credit card was used for both of their benefits and was paid from the joint account. The net amount of $12,305 is matrimonial property of which the wife has had the benefit. That amount should be taken into account in considering the wife’s position and what is just and equitable.
The parties agree that the husband retained his car until it was sold for $14,500 in March 2017. The husband submits that this sum should not be considered as it is included in his account balances. While he does have that level of cash, similar issues arise as with the wife’s case on the retained joint funds. This is now some years post the sale date of the vehicle and the husband has been working since. It is not clear that the money he still has in his bank account is or should be treated as the residue of that sale rather than money he has had and used and since replaced. On balance, taking the same approach I adopted with the wife’s use of marital assets post marriage, I would also consider that this is matrimonial property which the husband has had and used and which should also be taken into account in the same way.

b. Profit component of rental income of London property

The rental income of the London property was applied directly to its mortgage and to its associated costs throughout the relationship.
The profit, ie the income net of those costs, was paid to the husband’s UK bank account. That occurred both in respect of the first half of the London property throughout and of the second half of the London property from when it was purchased. These sums were never repatriated to Australia and were retained by the husband and used by him. The net rents paid to the husband over the period were agreed at $30,699.
The joint balance sheet includes an agreement that the net rent of $30,699 be dealt with as an “add back” attributable to the husband and this will be dealt with as property which the husband has had the sole benefit of.

c. Wife’s loan for legal costs

The liabilities are agreed other than the wife’s alleged debt of $51,873 to her parents for legal fees. That is not admitted by the husband. The wife was not challenged on her evidence and I accept her evidence.
The husband submitted it should not be included in the liabilities.
Section 117 of the Act prima facie requires each party to bear their own costs. Accordingly, it is not appropriate to deal with this loan as a liability. It will not be included in the assessment of assets and liabilities of the parties.

iv. Superannuation

The wife had superannuation of $87,643 and the husband superannuation of $73,072.

v. Husband’s UK pensions

During the course of the relationship the husband paid £11.20 per period towards these pensions. This amount was required to maintain his interest. It was agreed this was now valued at $138,974.

vi. Summary

Based on my findings above, at hearing the parties between them had net assets worth approximately $1,647,205. They had liabilities of $806,083, excluding the wife’s legal fees. On that basis they had total joint net assets of $841,122.
The applicant wife had assets of $641,659, liabilities of $331,265 and net assets of $331,265.
The respondent husband had assets of $1,005,546, liabilities of $474,818 and net assets of $530,728.
The above calculations do not allow for the wife’s beneficial interest in the London property.
The two real properties at $1,568,160 made up 95% of the gross assets, their associated mortgages of $801,603 made up 99% of the gross liabilities, and the net equity of $766,557 was 91% of the net pool.
Otherwise the husband has approximately $30,000 more in net assets than the wife, and cancelling out the addbacks of similar value, an “addback” of approximately $30,000 needs to be taken into account in respect of the husband’s receipt and use for his sole benefit of the net London rents.
The parties have similar superannuation as noted above. Neither party sought a superannuation splitting order.
Both parties submitted that s.75(2) factors, including superannuation and the husband’s UK pension, were not otherwise relevant and need not be further taken into account.
The case is primarily about the contributions towards and treatment of the two real properties. That is the basis on which the parties conducted the case and ultimately made submissions.

D. Income and financial contributions during relationship

i. Parties individual bank accounts

The wife had a bank account in her name with F Bank into which her salary was paid. The husband had a bank account in his name in Australia with the Commonwealth Bank into which his salary was paid. He also had UK bank accounts linked to the London property and mortgage.

ii. Parties joint bank account

The parties opened a bank account in both of their names (“the joint account”) with Westpac. They obtained the loan to buy the Street A, Suburb B property from Westpac. The joint account operated as an off-set account to reduce the balance of the mortgage over the Street A, Suburb B property on which interest was payable.
The parties’ salaries were paid by their employers into their personal Australian bank accounts. They agreed that “[f]rom this, a limited amount of funds was kept in their individual bank accounts for personal spending, with the majority of funds received in the Australian bank accounts transferred to the joint account ”.
As noted above, the London property rent income went directly to pay the London mortgage. Any net profit remained in the husband’s UK bank account.

iii. Incomes and financial contributions

a. Gross incomes

Both parties were working as professionals throughout. The husband was older, had been working for longer and was employed at a higher salary than the wife. When they met her gross income was $80,000 and his was $160,000. Her income increased at a greater rate than his over time in the usual way and at separation was $155,000, or 89%, of his $175,000.
At the hearing the wife’s salary in Australia was $190,000 and the husband’s in England was $270,000.

b. Net incomes

The parties net incomes and contributions to the joint account during the relationship were agreed to be as follows.
The husband’s total net income during the relationship was $385,257 while the wife’s was $254,522. That was a total of $639,779. Approximately 60% was earned by the husband and 40% by the wife.
The above net incomes were calculated on the basis that they included the $30,669 profit component of the London property rents which is an agreed notional “add back”.

iii. Contributions into the joint account

The parties agreed they each put the majority of their Australian salaries into the joint account.
According to the wife’s evidence the combined net salaries paid into the joint account over the relevant period totalled $513,125. That was made up of $299,583 by the husband and $213,542 by the wife. On that calculation the husband contributed approximately $86,000 more over the period. The percentages were 58% by the husband and 42% by the wife. On these figures they each contributed approximately 85% of their respective net incomes to the joint account.
According to the husband’s evidence, in annexure G to his affidavit, the total contributed was $483,301. He contributed $290,696 and the wife $192,605. On that calculation the husband contributed approximately $98,000 more over the period. That would be 60% by the husband and 40% by the wife, with each party contributing approximately 75% each of their respective net incomes to the joint account.
No cross examination occurred and no submissions were made to address the differences above. The issue was resolved by the parties agreement, noted above, that they contributed the majority of their net incomes to the joint account.
Accordingly, doing the best I can, the parties jointly contributed approximately $500,000 of their net incomes to the joint account. The husband contributed 60% to the wife’s 40%. This was about 80% of their respective net incomes. The husband contributed approximately $90,000 more than the wife over the period. The uses of funds from the joint account by the parties will be considered further below.
The husband and wife both worked full time in demanding professional roles and exercised the full extent of their earning capacity from time to time. The husband’s evidence was that the wife’s “work hours were longer than mine” in the context of his evidence that he therefore used his additional time to do additional domestic chores. He earned more because of his greater age and experience, but they contributed the same percentage of their net income. As her income increased so did the absolute amount she contributed.
Implicit in the husband’s submissions, dealt with below, is an assumption that there is no distinction to be drawn between contributions such as the wife’s capital saved over time which enabled the parties to purchase the Street A, Suburb B property, and the annual income contributed over time and used for living expenses. This argument will be addressed later.

iv. The uses of the money in the joint account

The wife gave evidence that money in the joint savings account was used for three broad categories.
The first was mortgage and strata payments in relation to the Street A, Suburb B property. The second was described as “joint spending money”. This covered the parties myriad of general living expenses. These living expenses were generally incurred on a linked credit card and paid from the joint account. Joint spending money involved the largest use of money in the joint account. The third category was described as “saving amounts”. The husband agreed with this characterisation in his oral evidence.
The husband’s case was, in effect, that the parties kept their money in the joint account because it was an offset account against the Street A, Suburb B property mortgage, but that the money was treated between them as if it were two separate amounts of money merely kept in one account.
This became clear in cross examination of the husband about why, if he intended the purchase of the second half of the London property to be mad with his money for his sole benefit, he did not transfer money directly from his personal Commonwealth Bank account rather than using money from the joint account.
He stated that in his view his money “went via my personal account to the … joint account and then out…” He stated that “The reason we put funds into our joint account was to minimise our interest on the property. So we transferred immediately all of our pay – well, not all of it, a vast majority – for me, it would have been around 90 per cent of my income paid into my sole account into the joint account. And that was the matter of course each month.”
He said he did not pay the funds he says remained his throughout directly from his personal bank account because it would have “cost myself more interest, because it wouldn’t have been in the offset account.”
When pressed on the issue of timing he said “Just as a matter of course, each month I transferred money into the joint account; that was the routine we had.”
The husband’s case in respect of the second half of the London property is therefore dependent on his case that the money in the joint account was not in fact treated by the parties or intended by them to be jointly owned money, but rather as separate money merely held for off-set purposes in the joint account.
The wife’s case is that the money in the joint account was joint money used for joint purposes of payment of the Street A, Suburb B property mortgage, payment of joint living expenses, and accruing joint savings.

v. The spreadsheet

The wife gave evidence that she maintained a running “spreadsheet” relating to the joint account. A version of a spreadsheet as at 16 August 2016 was in evidence. The husband placed significant reliance on the spreadsheet.
The spreadsheet deals with a joint bank account covering most of the relationship through which up to $500,000 flowed. It is 11 pages long. It is not an accounting record in any traditional sense. There was a date column then 3 columns with headings of: “Total with reference to Ipad”; “Total with reference to bank a/c”; and “Discrepancy”.
There are, generally, weekly entries. In many cases there are only entries in one column. The entries are not accounting entries in any traditional sense, but rather running notes on the parties special “deductions” and “savings” positions, often with text commentary and discussion.
The spreadsheet does not contain any information about, inter alia; the parties respective monthly payments into the joint account; the payments out of the Street A, Suburb B mortgage or strata payments; the payments out of the joint spending money payments. Thus the spreadsheet does not account for the overwhelming majority of the inflows or outflows from the joint account.
The husband put his case regarding the spreadsheet and the purchase of the second half of the London property to the wife in cross examination.
The cross examination of the wife on the key point included the following evidence:
Q … do you agree that these accounts show that the expenses associated with the acquisition of the beneficial interest in City C, London were borne by me alone, and that was the intention between us in these accounting records?
A No.
Q That was not the intention between us in these accounting records?
A No.
Q Despite the fact that it shows the deduction as coming from me in those financial records?
A The deductions came from our joint account.
Q So why were they written down “my savings” and purported to be withdrawals on my behalf?
A Because you wanted to reduce your savings by - - -
Q I wanted to reduce my savings?
A Yes.
Q Is that what you said?
A Yes.
Q HIS HONOUR: What do you mean by that?
A I mean that he wanted to contribute those amounts to City C, London, given what I had contributed more broadly across the property portfolio.
Q MR JERGENS: So can I ask again, because I’m still not clear on this, is your position that I was bearing the costs of City C, London, to equalise the imbalance of contributions to the Street A, Suburb B property?
A No.
Q So why was I paying the full amount of City C, London, for no seeming benefit?
A The payments were coming out of our joint account.
Q So – but they’re referenced here as being deductions from my own account. We’ve gone to the effort of actually producing detailed records here saying “amount paid by J.”. Why were they not just deductions diagnostic of individuals?
A Because you wanted to have these amounts reflected in your savings by way of a contribution to our assets.”
The wife’s evidence was in line with her submission that the allocation of “savings’ in the joint account related to the husband’s desire to eventually show, as between them, that he had made an equal financial contribution to the marriage over time given her greater initial contribution, and that this was an emotional or moral issue for the husband in the context of a marriage and not a legal accounting of contributions as between commercial joint venture partners.
It is worth noting here that the detailed submissions and calculations made concerning payments into and out of the joint account in this case were not based on any contemporaneous detailed accounting records of the parties. They were based on the parties analysis of underlying bank statements prepared for this case.
It is also worth noting that, at the end of the relationship, the spreadsheet recorded that in terms of the husband’s intention that he would catch the wife up the husband was recorded as being ($41,052.50) in deficit against his goal and the wife as being $53,459.64 ahead. That is to say, the recorded savings intentions did not match the actuality of the parties spending habits.

vi. Undisclosed income and payments for London property account

As noted above, the total income of the rents of the London property and the mortgage payments and associated deductions were not disclosed by the husband either in respect of the first and or second half of the London property. However, those incomes are reflected in the increased net equity in the London property.

E. Street A, Suburb B property

i. Pre-purchase living arrangements

The parties commenced co-habitation living for 2 weeks in accommodation funded by the husband’s employer. They then lived in rental accommodation in Suburb G from … 2013 at a rent of approximately $3,000 per month to which they each contributed. Consistent with their salaries the husband contributed approximately $2,000 and the wife $1,000 per month.

ii. Purchase of Street A, Suburb B property

On … 2013 the parties signed a contract to purchase a unit Street A, Suburb B NSW (“the Street A, Suburb B property”) for $690,000. A payment of $166,000 was provided and the remaining purchase price and transaction costs were paid for with a loan of $552,000 secured by mortgage.
The wife contributed $155,000 and the husband $11,000 of the $166,000. The wife effectively converted all of her assets to cash to fund the purchase of the Street A, Suburb B property. That was an agreed initial contribution by the wife of 93.4% and by the husband of 6.6% of the payment made.
The wife sold her car and used the proceeds towards buying the Street A, Suburb B property. Both parties thereafter used the husband’s car.

iii. Purchase of Street A, Suburb B furniture

In … 2013 the wife’s mother gave the couple a $22,500 loan to purchase household items. The husband’s evidence was that his intention was that his greater contributions to the joint account would be used to repay that loan. That did not occur. The wife eventually repaid the loan herself. The husband’s evidence “recognised [this] as “a contribution by [the wife] towards the Street A, Suburb B property”.

iv. Mortgage repayments, rent saved, and capacity to rent out the London property

The mortgage repayments were approximately $3,000 per month over the period, including both principal and interest. This was paid from the joint account.
$3,000 per month was approximately the same amount the parties were paying in rent prior to the purchase. These payments against the mortgage entitled them to jointly reside in the Street A, Suburb B property rather than pay rent elsewhere.
Over the period a total of approximately $90,000 was paid from the joint account. In that time the mortgage reduced from $552,000 to approximately $519,427.35. There were capital payments of approximately $32,500 and interest payments of $57,500.
They could have leased the Street A, Suburb B property out and rented elsewhere. This would have reduced the mortgage at a greater rate, but required them to pay additional sums for rent.
I note that the husband appears to seek to treat the entire $90,000 in mortgage payments to the bank, being contributions to capital, as equal to the initial contributions. A substantial component of the payments made were for interest. They were rewarded by the right to occupy the premises. The fact that so much of the payment went to capital reduction of the mortgage reflected the size of the initial payment, which was primarily made by the wife.
Further, the husband had originally purchased the London property to live in. The fact that he lived in the Street A, Suburb B property with the wife in this period also meant that the London property was not occupied by him and was available for rent. That rent was then available to pay the mortgage and other costs.

v. Post separation

Post separation the wife has continued to live in and have the benefit of the Street A, Suburb B property. The wife has solely serviced the mortgage over the Street A, Suburb B property and the property’s associated costs of approximately $78,500. The husband has made no contributions to the property in this period. The mortgage was reduced by a further $10,000.
The husband acknowledges that he stopped making contributions to the Street A, Suburb B property after separation, but submits that this was because the wife had taken exclusive possession and obtained the benefit of living in the property, and he therefore had his own living expenses, and the wife had taken out the balance of their savings from the joint account.
The husband also claims that any payments received by the wife from the wife’s sister for allowing her to stay at the Street A, Suburb B property post-separation should be taken as his contributions to the property. There is no evidence that the sister was living with the wife on any regular basis nor paying the wife anything. I make no allowance for this.

F: London property

i. Purchase of second half

In February 2014 the husband agreed with Ms D to purchase her 50% beneficial interest in the London property for $61,437. The husband was unable to borrow further monies on the existing mortgage against the London property. He did not have sufficient funds himself. He funded the acquisition through “loans from his father, step-bother, the wife, and other funds from bank accounts (including Wife and Husband’s joint Westpac account)”.
The initial $20,000 was paid from the joint account in the amounts of $10,000 on each of 14 February and 17 February 2014.
The husband’s father and step-brother made short term loans and were required to be repaid, together with 10% interest. These repayments were made over time using monies from the parties joint account as the husband could not otherwise repay them.
Payments towards the London property taken from the joint bank account totalled approximately $62,900.
There was evidence that the husband later “refunded” $6,000 of this amount. The wife says that he wanted to notionally refund that amount and she did not object. The husband points to this in support of his case, but does not address the other $56,900.

ii. Rent

During the period of cohabitation the husband was receiving rent from the London property which he did not remit to Australia.
As noted above, the majority of the rent was applied to the mortgage and other costs, both for the first and when acquired the second half of the London property over time. The total figures for these are not known.

iii. Tax on net profit

The husband kept the net profits of $30,669 in the UK. An additional $3,701 was drawn over time from the joint account to pay the husband’s Australian tax on the net income or net profit of the London property after deducting mortgage and other expenses.

iv. Post separation

The husband said that he was renting. The London property is therefore still available for rent. As with the wife and the Street A, Suburb B property, the husband has had the sole benefits of the rents from the London property since separation. Based on prior events, the rents from the London property were exceeding total costs and the husband would have been making a net profit.
The parties have each had the benefit of one property and the obligations for mortgage payments on that property since separation. This is roughly equal in effect.

G. Non-financial and homemaking contributions

The evidence and submissions on these issues was limited.

i. Non-financial contributions to assets

The husband’s case was that he invested “a significant amount of time” on the Street A, Suburb B property’s strata committee whose meetings generally went on for several hours. He said he also dealt with committee matters. The wife gave evidence that she also attended the meetings of the Street A, Suburb B property’s strata committee.
While the husband does appear to have attended these meetings and done some committee work, the value of this non-financial contribution to the financial value of the Street A, Suburb B property is not apparent. The evidence does not establish that this in any way contributed to the maintenance of or an increase in the value of the property. There is no evidence the committee would not have functioned without his contribution, or that he made a special contribution which served to maintain or increase the value of the property.
The wife said that she helped with the letting and maintenance of the London property when they were visiting London. She said she was included in decision-making in relation to the property and highlighted two occasions, in April 2014 and December 2015, where the parties visited the London property, when on holidays, to inspect the property. They met with the rental agent to discuss decisions about tenants.
In cross examination on this topic the wife stated that she was included in decisions in relation to tenants and the condition of the property, visited the property with the husband and a rental agent in order to inspect the condition of the property, and discussed the situation relating to the deterioration between visits. She said that while the husband, for the most part, managed the London property, and she, for the most part, managed Street A, Suburb B, they were both aware what was happening with both properties.
It was not put to the wife that this oral evidence was false and I accept this evidence.
I find that that there were overall broadly similar contributions by each party to the general maintenance of these two properties. There were no significant contributions in this context compared to the financial contributions.

ii. Homemaking contributions

The parties agreed that they paid a professional cleaner from the joint account and divided the other cleaning equally. However, the husband said that he undertook all of the washing of laundry and evening time cooking, “save for when we ate out or ordered food in”, partly because the wife was working longer hours to develop her career and he had more time.
The wife’s evidence was that domestic duties not undertaken by the cleaner were apportioned between the parties.
Given that there was a paid cleaner and both parties were working full time, and that it is agreed other cleaning was undertaken equally, and that the wife was working longer hours to advance her career and increase her future earnings for their mutual long-term benefit, I am not satisfied that the husband’s doing of the laundry and some extra evening time cooking in this context meant that the husband’s contribution as a homemaker was greater than the wife’s in any way that would justify an assessment of this as an additional contribution by the husband. I am satisfied that housekeeping contributions were substantially equal.

H. Did the parties intend the London property to be the husband’s alone and not marital property?

This was the major issue in the case.

i. First half of the London property

The husband’s case is that the first half of the London property was always intended as between the parties to remain his.
The husband’s case requires a finding that the wife agreed that, although she was potentially bringing 70% of the net assets to the relationship compared with his 30%, all of her net assets would become joint marital property but that only 35% of the husbands potential 30% should form marital property.
On that basis the husband says the wife agreed: to bring 87% of the net assets to the relationship to his 13%; and that she would retain none of her property for her own exclusive use; and that he would retain 65% of his property for his exclusive use.
In summary, the husband’s case is that they agreed that what was hers was theirs, and that the majority of what was his was his.
The wife’s case is that this was not proposed by the husband and was not agreed to by her. The wife’s evidence was that the intention was that they would jointly own the Street A, Suburb B and London properties as a couple, and later seek to purchase a further investment property.

ii. Second half of the London property

a. Oral evidence

Each party was cross examined very briefly. Each presented as reasonable competent adults and I drew no inference from either parties demeanour.
Much of the cross examination focussed on purchase of the second half of the London property. The husband in particular cross examined the wife about the spreadsheets.
The wife was cross examined in respect of the London property rents not forming part of the spreadsheet and why she did not trouble to enquire of the husband what the specific financial position was in respect of the London property.
She was asked: “can you please explain, Ms Larios, why the detailed financial records that you routinely prepared did not contain any reference to the rental income from City C, London?” and “Why was there no inquiry made as to the amounts received with respect to City C, London, given that you submit it was to be treated as a joint asset?” to which she replied “I was aware that the property washed itself, in that the rental income covered the mortgage payments and outgoings.”

b. Husband’s submissions

The husband’s further case is that the parties always intended that the second half of the London property was being purchased for his sole and exclusive use, and was never treated as joint marital property.
He submitted that he was solely financially responsible for the London property, using the rents to pay the mortgage and other costs.
He submitted that the use of money from the joint bank account to purchase the second half of the London property, and to pay the Australian tax liability on the net profits of the entire London property, was not evidence of an intent that it be jointly owned.
The husband’s case is in effect that he could have withheld the money used to purchase the second half of the London property, and kept it in his personal account and paid it out directly. He put it in the joint account because the joint account was operated as an off-set account against the mortgage over the Street A, Suburb B property. Not placing the money in the joint account first would have meant there was more interest to pay on the Street A, Suburb B property. A similar argument was raised for the money used to pay tax on the income of the entire property.
In effect, the husband submitted that the joint account was merely a single repository of what were in fact separate funds brought together to maximise the mortgage offset.
He submitted that this intention was evidenced by the detailed accounting records contained in the spreadsheet. In that regard he relies on the fact that the spreadsheet did not detail the incomes and outgoings of the London property to support his proposition that it was never intended to be nor ever actually dealt with as joint property.
He submitted that this interpretation of the spreadsheet was supported by the fact that the two amounts of $3,000 being lent to him in respect of the London property were later repaid by him. He did not address the question of this of course, which raises the issue of the other $57,000.

b. Wife’s submissions

The wife’s case is that they each contributed a portion of their respective incomes to be joint marital property by placing it in the joint account.
The first two agreed categories of money in the joint savings account, for payments for the Street A, Suburb B property and for joint spending money, were clearly joint marital expenses. The third “savings” category was a flexible category from which monies were taken for other joint spending.
The wife’s case is that this was also joint savings and that the clearly notional and unfixed allocation to each party was to do with the husband’s desire to establish in due course that he had “caught up” as a question of fairness between them. Consistently with that long term intention, in relation to the $6,000 “repaid” by the husband, her evidence was that he wanted to “repay” the money, and she did not object.
The wife’s case is that they used joint funds as a couple to purchase the second half of the London property to increase their joint marital property holdings.
Her case was that the use of the rent monies from the London property, both first and second half, to pay the associated mortgage was not the husband’s sole contribution, but the jointly owned investment property paying for itself. That is why they used joint funds to pay the tax liability, in the husband’s name, on the profits from the income of the entire London property because the liability arose from the profit on their jointly owned London property, held legally in his sole name for historical reasons.
The wife also gave evidence that she had participated in decision making about the London property and, as noted above, that evidence was not contested. She submitted this was both a non-financial contribution to that property and evidence that the parties in fact treated the property as joint marital property throughout the relationship.
In summary, the wife’s case is simple. They each contributed the entirety of the assets they brought to the marriage in the usual way in anticipation of a lifetime together. That included the first half of the London property. They each contributed most, but not all, of their net incomes to a joint account as joint property for use on joint expenses and purchases. The items purchased with that money were purchased as joint property. That included the second half of the London property. The spreadsheet was an account of some limited notional movements in the joint account relating to the husband’s desire to catch up with her greater original contribution by contributing more income over time.

iii. Conclusion

There are a number of difficulties with the husband’s arguments.
Starting with the second half of the London property. If the sole reason for having their money in a joint account was because of the benefits of the offset, then the parties would have been expected to put 100% of their incomes into the joint (off-set) account and not merely 80%%.
The 20% of net income not put through the joint account over time, on the parties agreed facts, was approximately $639,779 - $500,000 = $139,000, that could have been put into the joint account. That is more than twice the amount of money used to purchase the second half of the London property. On the husband’s case that money would have been expected to be kept in the joint account for the same reason.
On the husband’s case there was no reason to each retain 20% of their net income and keep it in personal bank accounts available for their own sole personal use, yet that was what occurred.
The objective evidence of maintenance of personal bank accounts and of a percentage of personal income separately for personal use in those accounts is inconsistent with the husband’s argument that the monies in the joint account were not intended to be joint monies. I give significant weight to this objective conduct by the parties.
Further, the husband agreed with the three broad categories of use of the money in the joint account stated by the wife. He therefore necessarily accepted that some of the monies in the joint account were being used for joint expenses. Both in respect of the Street A, Suburb B mortgage and strata fees and in respect of other joint living expenses. On that basis some of the monies in the joint account were necessarily joint monies being used for joint expenses.
That would only leave the monies representing “savings” as separate funds. However, the husband did not challenge the wife’s evidence that the notional savings were in fact used for joint expenses if the budget was exceeded. In that way the “savings” were not fixed and quarantined. The fact that the “savings” were purely notional or aspirational is also consistent with the fact that there was a $90 difference between the parties goal and the reality regarding savings at the end of the relationship.
This ties in with a further difficulty, which is that, as noted above, the spreadsheet did not seek to deal with the parties funds in the comprehensive, dollar-by-dollar, manner which would have been required had the joint account not in fact been composed entirely of joint marital funds, but merely a single repository of completely separate personal funds or of some joint funds and some clearly separate funds.
If the joint account was to operate as the husband says it was intended to, then actual detailed accounts would have been required on an ongoing basis.
While the husband relies on the fact that the spreadsheet did not detail the incomes and outgoings of the London property as evidence that it was not marital property, nor did it detail payments in, or payments of, the mortgage and strata payments on the Street A, Suburb B property which was jointly owned property. The wife says that the London property “washed” itself and no accounting was required, except for tax.
The spreadsheet does not support the husband’s case on this issue. To the contrary, the spreadsheet is inconsistent with his argument by reason of its sparsity.
The spreadsheet is consistent with the wife’s case that these were joint funds to which the husband’s intention was to contribute more than the wife over time, in order to gradually make up for his lower initial contribution as a question of fairness between them.
I am satisfied that the objective evidence is inconsistent with the husband’s case that the parties intended the second half of the London property to be his sole property.
The objective evidence is consistent with the parties choosing to put 80% of their incomes into a joint account for use as marital property consistent with an intention to remain in a long term marital relationship.
The husband did not contest the wife’s evidence that she took an active part, when she could, in relation to the London property.
Based on the objective conduct of the parties, I find on the balance of probabilities that the money in the joint account was intended by the parties to be and was joint marital property.
I find that the second half of the London property was purchased using joint marital property with the intention that it be jointly owned.
I find that, although the wife contributed less to that joint fund than the husband, as the money used to buy the second half of the London property was joint property, the wife would be entitled to a declaration pursuant to s.78 of the Act that the husband holds 25% of the London property as on trust for her. As no such declaration is sought and other remedies are relied upon, although that is the finding of this Court, no such declaration will be formally made at this time.
In respect of the first half of the London property, the above finding in respect of the second half supports the wife’s case.
Further, the husband’s case is inherently less likely than the wife’s. While the wife was younger than the husband she was 25 and a qualified professional working at Employer E who had acquired substantial assets for her age. It is less likely that she would have agreed that what was hers was theirs and that most of what was his was his when she had more net assets than he did at a younger age, than that they intended in the common way to bring all of their respective assets to the relationship
The likelihood is that the parties intentions were that they were entering into a long-term relationship and marriage to which each would contribute all of their available net assets, including the first half of the London property.
I find that the parties intended the first half of the London property to be part of the husband’s initial contribution to the marital assets of the parties matching, in part, the wife’s larger initial contribution.
While I have found that the parties intentions were that the first half of the London property would be marital property, and that the second half was purchased using joint marital funds and was intended to be and was marital property, I note that if I were wrong in this I would still include this property in the pool of assets for consideration and adjustment based on actual contributions.
That is because in circumstances where: the wife contributed the entirety of her net assets to the relationship; her assets were 70% of the net assets available; her funds were used to purchase 93.4 of the matrimonial home the parties lived in; where the parties contributed an equal proportion of their net incomes to a joint pool for all other joint expenses; and where the second half of the London property was purchased using those joint funds, it would be unfair and inequitable to exclude the London property from consideration when assessing actual contributions and what is just and equitable as between the parties.

I. Did the husband’s greater income contributions equate to out the wife’s greater initial contributions?

i. Wife’s case

The wife’s evidence accepted that there were discussions about the husband’s greater income allowing him to contribute 2 to 1 to the joint account, so as to catch up over time to her greater initial contributions, so there would eventually be parity of contributions between them.
The husband’s financial contributions were in fact 60% to 40% rather than 2 to 1 as the wife’s income rose relatively quickly, and contrary to their intentions on the spreadsheet, at the end of the relationship, as a matter of fact, the husband was more than $41,000 below and the wife more than $53,000 above “the planned contributions”. The intention was not achieved.
Her case was that his greater income contributions to achieve parity between them were to be over the course of the anticipated marriage. That long marriage did not eventuate. When considering what is just and equitable in this short marriage, while the parties long term intentions may be of some interest, the real question is what the actual contributions were.
As each party was contributing the same percentage of their net income to the joint account, the wife’s case is that the payments made from the joint account should be treated as being equal contributions by the parties to the payments made with them.

As most of the money put into and taken out of the joint account was spent on living expenses, including the interest on the Street A, Suburb B mortgage which was equal to the cost of rent elsewhere, and other day to day costs, the contributions should not be treated as equal to the initial capital contributions.

ii. Husband’s case

The husband’s case, which was not always easy to follow, appeared to be that there was no real difference between capital contributions and income contributions used on daily living expenses, so that his greater contribution of net income was to be equated to the wife’s contribution of capital at the commencement of the relationship.

J. Submissions

i. Wife’s submissions

I have outlined and accepted many of the wife’s submissions above. In particular in relation to the London property being joint marital property, and to the effect that the income contributions were, in this context, broadly equal and in any event that income is not to be counted dollar for dollar with capital contributions.
The wife submitted, and I agree, that the husband has fallen into the error referred highlighted by Strickland J in Grant & Williams [2010] FamCA 1074 at [97]:
“I observe that a further by product of acting for herself was that the wife adopted a strict accounting approach to her claim for property settlement without appreciating how flawed such an approach is. That has been recognised from the earliest jurisprudence in this Court (eg. See Hayne and Hayne (1977) FLC 90-265, Garrett and Garrett (1984) FLC 91-539 and Norbis v Norbis (1986) 161 CLR 513, at 521-523).”
The wife’s further submission was that this was “a marriage … not a joint venture between corporate entities for a commercial purpose” and that “The income earned by both parties during the cohabitation is seen in that light, such that it would be in error to place substantial weight on the income earning differential”.
The wife’s submission was that given that the vast majority of the net equity in the pool is made up of the $771,050 net equity in two properties, and given the distribution of other assets and agreed add backs, a global approach applied solely to the two properties as a single pool would be an appropriate approach. That would take into account the other property and debts and add-backs in arriving at a percentage, but not directly deal with them in the calculation.
In the context of a short marriage, and on the basis of her initial contribution of 70% of the net assets at cohabitation, and the fact that this formed 93.4% of the initial contribution to the Street A, Suburb B property which was said to be a lynchpin asset, her almost equal contributions to the joint account in the context of the Act, her contribution to the purchase of the second half of the London property, equal and minimal non-financial contributions to financial assets and homemaking contributions, and that s.75(2) factors were submitted not to be relevant given equal superannuation and working professionals, and after considering the husband’s $30,000 excess of other assets and the husband’s $30,000 excess add back, the wife submitted the property interests in the real property should be adjusted so that she receives 61.13% of the net real property pool.
That would be 0.6113 x $766,557 of the net real property pool = $468,596. If the wife takes the entire $390,477 net equity in the Street A, Suburb B property the husband would be required to pay her $468,569 less $390,477 = approximately $78,119.
In summary, the wife, in essence, seeks orders that she be made sole legal and beneficial owner of the Street A, Suburb B property with sole liability for the associated mortgage, and also that the husband be ordered to pay her approximately $78,119. On that basis the husband would be declared the sole legal and beneficial owner of the London property with sole liability for the associated mortgage. Failing payment by the husband the London property would be sold to pay the wife $78,119 with the remainder to the husband. Each party would otherwise retain all their own assets, including superannuation, and debts and liabilities.

iii. Husband’s submission

The husband submitted that there were “various asset pools” which should be divided on an “asset-by-asset” “following the approach in McMahon & McMahon (1995) 19 FamLR 99; affirmed by the very recent case of Newland & Rankin [2017] FCCA 210”.
In McMahon (at page 82,043) a significant feature was that “the parties’ strict division of assets and their method of dealing with them lent itself to an asset-by-asset approach”.
The husband’s submission was based on his case that there were three distinct asset pools.
Pool 1: The London property, on the basis that it was never treated as a joint marital assets. He submitted he should retain that in its entirety and it should otherwise be excluded from consideration.
Pool 2: The Street A, Suburb B property, and also its fixtures, fittings, furniture and appliances and the joint account balance. He submitted that, on the basis of treating his greater contributions of net income to the joint account as his separation contributions and equal to capital contributions, that deducting the wife’s initial greater contribution to the Street A, Suburb B property, and then including furniture and fittings, that the wife would receive $275,000 and the husband $150,000 of the net asset pool. That is to say 35% of the value of the Street A, Suburb B property and furniture.
Pool 3: Other joint assets including engagement and wedding gifts, of which he submitted he should be attributed 50%.
On that basis, the husband submitted that he would be awarded approximately $150,000 as well as being able to keep the London property and his other personalty with the wife keeping the Street A, Suburb B property and it’s mortgage.
In summary the husband submits he should end up with approximately $526,000 of the $766,557 or 69% of the net equity in the two properties, despite having only brought 30% of the initial total contributions because the London property was always solely his, and because of his 60/40 contribution of the net income over 3.5 years.
In summary, the husband, in essence, seeks that he be declared or made the sole legal and beneficial owner of the London property and of the associated mortgage, and also that he be paid a portion of the net equity value of the Street A, Suburb B property which at $150,000 would be 38%. On payment of that sum by the wife she would become the sole legal and beneficial owner of the Street A, Suburb B property and of the associated mortgage. Failing payment of that sum by the wife the Street A, Suburb B property would be sold and the husband would be paid 38% of the net proceeds with the remaining monies being paid to the wife. As with the wife’s proposal each party would otherwise retain all their respective assets including superannuation, and debts and liabilities.
The difficulty with the husband’s submissions are that they proceeded on a basis inconsistent with my findings, in particular concerning the London property.
A further difficulty is that I do not accept the manner in which he appears to deal with income contributions.
The husband did not make any submissions in the alternative for me to consider in the eventuality that I did not accept his primary submissions.

K. Decision

The parties both seek orders pursuant to s.79 of the Act. It is just and equitable to make such orders to terminate the financial entanglement of the parties.
For the reasons given above the assets and liabilities of the parties are as set out in section C. vi “Summary” above.
The parties initial contributions were $150,000 or 70% by the wife and $63,600 or 30% by the husband. The husband’s contribution included the first half of the London property.
The parties each contributed approximately 80% of their respective net incomes to the joint account. That was approximately $500,000 over the period to separation. The husband contributed 60% to the wife’s 40% and approximately $90,000 more than the wife over the period.
However, as this was marriage and not a business venture, and where the parties were each working full time and the wife was actually working longer hours in order to increase her professional skills and future earnings, and they were each contributing the same percentage of their net income to the joint account, these contributions would, broadly, be considered as equal, with perhaps a small weighting towards the husband in recognition of his greater contribution in absolute financial terms.
Further, the parties joint funds were spent on the Street A, Suburb B property mortgage which was mainly interest and allowed them to live there rather than renting, and on the myriad of other joint day to day expenses a married couple incurs. The “notional” savings represented only what was left over after actual expenditure. These ongoing contributions of earnings were not of the same character as, and cannot be directly compared in terms of contributions to, the savings which each party brought to the relationship for investment into real property, or to that component of the joint monies that were invested as capital in buying the second half of the London property.
The contributions other than financial contributions and contributions to family welfare and homemaking are as set out above. They were minor and equal and no party relied upon these in submissions. The parties agreed that s.75(2) factors were not relevant in the absence of children, roughly equal superannuation and similar unimpaired future earning capacity.
For the reasons give above the entire London property should be included as part of the assets for consideration and for adjustment.
Rather than dealing with this as a full global assessment I will adopt the approach submitted by the wife and apply a global assessment to the net equity in the two items of real property. This approach will not result in any injustice as I will take into account the other property noting that the husband has an excess of other net property of approximately $30,000 over the wife, the $30,000 notional add back to the husband’s account for the London rents, and the payment by the wife of $22,500 to her mother for the loan for furniture.
This was a short marriage. The wife brought 70% of the net assets to the relationship. Without her substantial savings the parties are unlikely to have been able to purchase the Street A, Suburb B property. Having purchased the Street A, Suburb B property joint funds were used to purchase the second half of the London property.
The husband did contribute 60% of the parties joint net income to the joint account but this money was primarily used for day to day expenses. Nevertheless, some account must be taken of the fact that the husband’s financial contributions of income during this period were greater than the wife’s.
The wife submitted that, taking all factors into account, the relative contributions would lead to a figure of 61.13% of the net real property value being adjusted to the wife. That rather specific figures sits uncomfortably with the wife’s submission that this is not an accounting exercise.
Taking into account all of these contribution factors and the other assets and the husband’s add back, I do consider that an appropriate adjustment would be achieved by the wife having 60% of the net value of the two properties and the husband 40%. I consider that appropriately balances the competing contributions and other factors, while also standing back and considering the overall justice of the result that will achieve.
On that basis, to achieve an adjustment where the wife retains the Street A, Suburb B property and its associated mortgage, the husband retains the London property and its associated mortgage, and otherwise each party keeps all of their other property and debts and superannuation, the husband is to pay the wife a sum to achieve that result.
That is 60% or 0.6 x the net equity in the two real properties of $766,557, less the existing equity in the Street A, Suburb B property of $390,477. 0.6 x of $766,557 = $459,934. $459,934 - $390,477 = approximately $69,457. I round that to $69,500.
Accordingly, the wife is to be made the sole legal and equitable owner of the Street A, Suburb B property and solely liable for its mortgage and otherwise keep all of her property and debts and superannuation.
The husband is to pay the wife the sum of $69,500 and on payment of that money will acquire her equitable interest in the London property and otherwise continue to be liable for its mortgage and keep all of his property and debts and superannuation.
The wife seeks the usual orders in this situation that if the husband does not make the required payment in the required time that the husband will be required to sell the London property and that she will be paid out of the proceeds of the sale. If the husband reasonably requires the wife to sign documents to evidence the extinguishment, or sale, of her equitable interest in the London property she will be required to provide those to the husband.
I will make orders in accordance with these reasons.

L. Costs

Each party seeks costs. Pursuant to s.117 of the Act the usual rule is that each party pays their own costs. The Court will reserve the question of costs.
If any party seeks a costs order they are to file and serve an Application in a case for costs within 28 days. If an Application is filed the matter will be given a listing for argument. If no Application is filed within 28 days the usual rule that each party pays its own costs will take effect without further order.

I certify that the preceding two hundred and twenty-nine (229) paragraphs are a true copy of the reasons for judgment of Judge Bruce Smith

Date: 28 August 2019

[2019] FCCA 2391

28 August 2019

Key Legal Topics

Areas of Law

Family Law

Property Law

Legal Concepts

Remedies

Costs

Jurisdiction

Injunction