LONGWORTH & DEANE
[2017] FamCA 870
•3 November 2017
FAMILY COURT OF AUSTRALIA
| LONGWORTH & DEANE | [2017] FamCA 870 |
| FAMILY LAW – PROPERTY – Application by the wife for an adjustment of property interests – Where the parties are aged 65 and 59 – Where the parties were in a relationship for 11 years and married for three years – Where there are no children of the relationship – Where the Court found that the debts that the wife asserted she owed to third parties would not be pursued by them – Where each party’s paid legal fees were added back to the property pool – Section 75(2) factors – Adjustment of 2.5 per cent to the husband for the wife’s greater future earning capacity – Overall property adjustment of 52.5 per cent to the husband and 47.4 per cent to the wife. FAMILY LAW – PROPERTY – CONTRIBUTIONS – Where the parties contributed equally during the relationship – Where the wife asserted her contributions were made more onerous by reason of family violence – Where the Court found this case is not an exceptional case as required by Kennon & Kennon (1997) FLC 92-757. |
| Family Law Act 1975 (Cth) ss 75(2), 79(2) Succession Act 2006 (NSW) |
| Kennon & Kennon (1997) FLC 92-757 |
| APPLICANT: | Ms Longworth |
| RESPONDENT: | Mr Deane |
| FILE NUMBER: | SYC | 3479 | of | 2013 |
| DATE DELIVERED: | 3 November 2017 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Rees J |
| HEARING DATE: | 23, 24, 25 and 26 October 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Millar |
| SOLICITOR FOR THE APPLICANT: | Barkus Doolan |
| COUNSEL FOR THE RESPONDENT: | Mr Lethbridge SC with Ms Sproston |
| SOLICITOR FOR THE RESPONDENT: | Armstrong Legal |
Orders
IT IS ORDERED
That within 28 days of the date of these orders, the husband pay to the wife the sum of $161,243 by way of property settlement.
That simultaneously with the payment referred to in Order 1, the wife sign all documents required to transfer to the husband her interest in the property known as B Street, C Town being Lot … in Community Plan … (“the property”).
That simultaneously with the payment referred to in Order 1, the husband do all things required to discharge the mortgage over the property to E Bank and procure the release of the wife from any obligation pursuant to that mortgage.
That the wife do all things required to transfer to the husband her interest in the E Bank … Account; The NAB Business Cash Maximiser account no …82 and to transfer to the husband, should he require her to do so, any share held by her in D Pty Ltd and resign as a director.
That in the event the husband has not paid the sum in Order 1 by the due date, then each of the parties shall do all acts and things required to sell the property and to disburse the proceeds of sale in the following priority:
(a) In payment of the mortgage;
(b) In payment of agent’s costs and solicitor’s costs of sale;
(c)In payment of the sum of $161,243, together with interest as prescribed by the Family Law Rules 2004 (Cth) from the due date to the date of payment, to the wife;
(d) In payment of the balance to the husband.
That, subject to these orders, each party shall be entitled to retain all property in her or his possession at the date of these orders.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Longworth & Deane has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 3479 of 2013
| Ms Longworth |
Applicant
And
| Mr Deane |
Respondent
REASONS FOR JUDGMENT
Ms Longworth (“the wife”) and Mr Deane (“the husband”) lived together, married in 2008 and separated in March 2011. There was a dispute about the date upon which they commenced co-habitation, in 2000 or 2001.
The wife had previously lived in a de facto relationship with Mr F. She and Mr F purchased a property at G Town in June 1994 for $197,500. The de facto relationship ended in 1998. The wife asserts that she and Mr F entered into an informal property settlement whereby they agreed that Mr F would be entitled to the whole of the G Town property.
The husband had been previously married. At the time of co-habitation, he had not finalised the property settlement with his then wife, Ms H.
There is a dispute as to the assets each party had at the time of co-habitation. Each was conducting a business as a consultant through a company. The wife’s company was J Pty Ltd (“JPL”). The husband’s company was D Pty Ltd (“DPL”).
They lived together initially in rented premises in Canberra.
After the commencement of co-habitation, the wife undertook work for DPL. There is a dispute about whether she was paid for this work but, as will later be explained, I do not consider it necessary to resolve this dispute.
On 3 July 2002, consent orders were filed in relation to the property settlement of the husband and Ms H. As a result of their agreement, the husband retained DPL and Ms H transferred her share to him and ceased to be a director. She also paid him $55,000.
Between July and October 2002, the wife provided a total of $50,000 to DPL which was then in financial difficulties. There is a dispute about whether this transaction was a loan or whether the wife acquired equity in DPL but, as will later be explained, I do not consider it necessary to resolve this dispute.
In March 2003 the parties moved to Suburb K.
In December 2003, the wife commenced consulting for DPL as a contractor. Until early 2008, she worked for two weeks out of every four in Melbourne. When she was working in Melbourne, she stayed with Mr F in G Town until 2006 when DPL rented an apartment in Suburb L in which she commenced residing.
On 19 October 2004, the wife became a director of DPL.
In July 2005, JPL ceased to trade and the wife became an employee of DPL.
In July 2007 the parties temporarily separated. The wife remained in the rented home at Suburb K. They continued to work together.
In November 2007, the husband purchased a property at B Street, C Town (“C Town”), for $570,000 funded by a mortgage of $480,000 from the E Bank. The wife does not assert that she made any contribution at the time of that purchase. The husband paid the balance of the purchase price of $90,000 plus the costs of acquisition. There is no evidence of those costs but the stamp duty would have been about $21,000 so I infer that the husband contributed about $111,000. Having regard to my findings about the assets each of the parties had at the commencement of their co-habitation, any funds that either of them contributed to C Town must have been accumulated in the course of their relationship.
The parties reconciled in December 2007 and the wife moved into C Town.
On 14 December 2007, the wife paid $83,479 into the mortgage account.
There is no dispute that thereafter they equally made the mortgage payments.
On 20 July 2008, C Town was transferred to the husband and the wife as joint tenants. The mortgage was refinanced and a new mortgage in the sum of $395,000 was entered by them jointly.
In 2008, they married.
In July 2009 the husband’s mother died and the husband was a beneficiary of her estate.
In August 2009 Mr F sold G Town for $660,000. On settlement the wife received $100,000. There is a dispute about the circumstances surrounding that transaction.
In September 2009 the wife provided a further $40,000 to DPL.
In October 2009, the husband received $212,060 from his mother’s estate.
In May 2010 the wife commenced consulting to M Pty Ltd, through DPL.
The parties separated on 26 March 2011 but continued to work with DPL. The wife moved to live with her parents at Suburb N. She paid them rent of $150 per week.
In April or May 2012, the wife gave her car to her sister and bought a new car.
On 1 July 2012, the wife negotiated a contract with M Pty Ltd to provide services as a consultant through JPL. Thereafter she did not do work for DPL.
On 25 January 2013, the husband registered the business name “D” and he has continued to provide consultancy services through a company O Pty Ltd (“OPL”) from time to time.
On 4 March 2013, the husband withdrew $150,000 from his superannuation. He did not tell the wife.
The wife’s contract with M Pty Ltd ended on 30 September 2013.
The wife’s father died in late 2013. Shortly before his death, he made a new will leaving his whole estate, including a half share of Suburb N, to the wife’s sister, Ms P.
On 25 April 2015, the wife’s mother died leaving her estate to both of her daughters. The wife then held a 25 per cent interest in Suburb N and her sister held the remaining 75 per cent.
In July 2015, the husband withdrew a further $52,805 from superannuation.
By September 2017, the husband had withdrawn the balance of his superannuation and closed the account.
THE HEARING
The wife relied on affidavits by herself, Mr F, Ms P, Ms Q, Dr R (her general practitioner) and two affidavits of Ms S, her psychologist.
Ms Q and Dr R were not required for cross-examination.
The husband relied on affidavits by himself and his psychologist, Ms T, who was not required for cross-examination.
A single expert, Ms U provided evidence in relation to the value of the corporate entities and was not required for cross-examination.
THE ISSUES
At the commencement of the trial, counsel defined the issues for determination to be:
· The date of commencement of co-habitation;
· The initial contributions of each party;
· The extent to which each was remunerated;
· Whether the wife lent funds to DPL or purchased equity;
· The competing allegations of family violence – in accordance with Kennon & Kennon;
· The husband’s use of funds post-separation;
· The capacity of each party for future employment;
· Whether the wife owes any money to Mr F;
· Whether the wife owes any money to Ms P;
· Whether the wife has any interest in the real property presently registered in the name of Mr F;
· Whether the wife will receive any benefit from the estate of her late father.
I propose to consider and determine each of these issues.
The date of commencement of co-habitation
The wife contended that the parties commenced to live together in August 2000, the husband contended that it was August 2001. Each relied on their recollection. Neither produced any empirical evidence.
The wife, in her Initiating Application, nominated August 2000 as the commencement date and the husband, in his Response, did not challenge that assertion.
It was ultimately conceded by senior counsel for the husband that the relevant date is August 2000.
The initial contributions of each party
The wife asserted that her initial contributions were:
· Legal interest in one half share of G Town;
· $27,000 cash held by JPL;
· About $54,000 in superannuation;
· Car, furniture and personal effects.
The interest in G Town was not relevant as she never contributed that interest to the marriage.
As to the assertion that JPL had $27,000 in cash, that needs to be viewed in conjunction with its liabilities at the time. As at 30 June 2000, the financial statements of JPL show that JPL had $36,196 in the bank and current liabilities of $19,283, leaving a net amount of $16,913. Otherwise the assets of JPL were some office equipment and furniture of little value.
As to her assertion in relation to superannuation, she relied on a statement produced for the year ended 30 June 2002 which demonstrated an amount of $59,988. However, the financial statement of JPL demonstrates that $31,631 was contributed to the wife’s superannuation in the financial year ended 30 June 2001 and a further $32,000 was contributed in the financial year ended 30 June 2002. It would appear that all of the wife’s superannuation had been accumulated after the commencement of co-habitation.
The wife’s assets at the commencement of co-habitation consisted of cash of not more than $17,000 together with her car and personal effects.
The husband, at the commencement of co-habitation, had an interest in the property which had been the former matrimonial home of himself and Ms H. When they agreed to divide their assets in July 2002, he received $55,000.
The husband was operating DPL, although Ms H was still a shareholder and director until July 2003. DPL was in financial difficulties and having difficulty meeting its day to day expenses as at August 2000. This situation continued for some years and the wife injected funds into DPL to enable it to continue trading. I cannot find that DPL had any positive value. DPL had debts including an overdraft, loans and credit card liabilities. It probably had a negative value.
The husband asserted that he had the following assets at cohabitation:
· Shares in Axa and Colonial (not valued);
· Household contents and personal effects;
· Cash of $3,500;
· Debts owed by his children of $3,875;
· Superannuation of $150,000.
The husband was cross-examined in relation to the last three assertions. He conceded that his evidence was based only on his recollections and that he had no documents to substantiate his assertions.
It became clear in cross-examination that the husband’s recollections were, at times, not reliable. For example, he deposed that at the commencement of co‑habitation he was the sole shareholder and director of DPL. That was incorrect. He deposed that the Deane Family Trust had not traded. That was incorrect. I am unable to place a value on the husband’s superannuation based solely on his recollection when his recollection in relation to that issue has been challenged and has been found to be wanting in relation to other specific assertions.
I accept that the husband’s initial contribution was his interest in his former matrimonial home which ultimately was crystallised at $55,000 and superannuation in a substantial sum.
The husband’s initial contributions exceeded those of the wife but, after the lapse of 17 years, the difference would not be so great as to warrant any adjustment.
The extent to which each was remunerated
Both of the parties prepared their cases and their affidavits on the basis, and in the apparent expectation, that the Court would conduct some sort of partnership accounting. They each attempted to give evidence in minute detail of financial transactions specifically relating to what each of them drew from various corporate entities or lent to those entities from time to time.
During the relationship, each of the parties worked as a consultant. Each contributed their expertise and labour to the joint enterprise of their marriage. Whatever either of them may have drawn or lent to the corporate entities, their joint purpose was their family and there is no evidence (with one exception that will be canvassed later in these reasons) that either of them used money for any purpose other than the welfare of their family unit.
I do not propose to determine this question.
Whether the wife lent funds to DPL or purchased equity
For the reasons expressed above, I do not intend to resolve this issue.
The wife advanced funds from time to time to DPL as it needed money to pay operating expenses.
Whether, as a result of those transactions, she acquired equity in DPL as the husband contends, or was a creditor of DPL as she contends, is not relevant to the issues I am required to determine.
This is particularly so when it is agreed that DPL has no present value.
The treatment of the assets of DPL immediately after separation
This issue relates to an item in the balance sheet where the wife, at item 32, seeks to add back certain funds.
The single expert, Ms U, in her report stated that as at 30 June 2012 DPL had a value of $62,000. That value was broadly made up as follows:
Cash at bank $27,290
Electricity deposit $ 250
Trade creditors $66,368
Total assets $93,908.
Ms U also accounted for formation expenses, improvements and office equipment which would have not been realisable at value.
DPL had liabilities of $39,313. However, there is no evidence that the trade creditors ever paid what they owed or that the husband ever had access to $62,000.
It is agreed that DPL has no present value to the husband and no longer trades.
In those circumstances it is inappropriate to add the amount back to the balance sheet.
The competing allegations of family violence – in accordance with Kennon & Kennon
In Kennon & Kennon (1997) FLC 92-757, the Full Court held that, where family violence has been found to have occurred, a spouse’s contributions may have been made more arduous by reason of that family violence.
Their Honours Fogarty & Lindenmayer JJ said, at 84,294:
Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties' respective contributions within s 79. We prefer this approach to the concept of “negative contributions” which is sometimes referred to in this discussion.
In the above formulation, we have referred only to domestic violence, for the reasons which we indicated earlier, but its application is not limited to that.
We think the earlier cases may have overlooked the distinction which more recent cases have emphasised. However, if it is thought now to be artificial to distinguish those longstanding authorities in that way, it appears to us, having regard to the reconsideration which has been given to this matter over recent times, that it may now be appropriate for this Court to treat those authorities as no longer binding and to be subject to the qualifications and distinguishing feature referred to in the recent decisions of this Court. There have been marked changes in perceptions, both legal and social, about domestic violence and its impact in recent times and it appears to be appropriate to give effect to them: see Nguyen (1990) 169 CLR 245; Farnell and Farnell (1996) FLC 92-681, and Ivanovic v Ivanovic (1996) FLC 92-689.
However, it is important to consider the “floodgates” argument. That is, these principles, which should only apply to exceptional cases, may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks and so return this Court to fault and misconduct in property matters – a circumstance which proved so debilitating in the past. In addition, there is the risk of substantial additional time and cost.
However, in our view, s 79 should encompass the exceptional cases which we described above. It would not be appropriate to exclude them as a matter of policy because of this risk. It is a matter of commonsense for the lawyers involved and, where that may not be sufficient, it is a matter for a firm hand by the Court at an early stage when a case appears to raise those issues.
It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect and of necessity it does not encompass (as in Ferguson) conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions).
Each of the parties made allegations that the other had been violent in the relationship.
Each denied the allegations of the other.
There is no evidence of any contemporary complaint being made to any third party, or to a medical professional, or police. With the exception of some email correspondence, there is no objective corroboration of the allegations of either party.
The nature of the allegations is not such that they could be considered exceptional. The wife alleged that the husband “barged” her; “walked forcefully towards her”; pushed her over causing her to hurt her knee; drove recklessly to intimidate her; threw her luggage onto the footpath from the car; pushed her out of bed; picked her up while she was sleeping and carried her to bed against her will; gripped her hand tightly; locked her out of the house; damaged the mudguard of her car and “humiliated and embarrassed” her.
The husband alleged that the wife threatened to have him beaten up; left hidden notes in the house after separation saying that she was coming to “clean the place out”; engaged in verbal arguments; screamed at him to the extent that he had to leave the house or lock himself in the bedroom to escape; threw a pot plant at a window in an attempt to break the window; damaged the front bumper and headlight covers of his car; forced her way into his bedroom and screamed within an inch of his ear for 30 minutes; followed him screaming into the back yard; forced him to leave the house and stay at a motel for respite from her tirades.
The husband admitted that he had kicked a screen door and that he had damaged the wife’s car as she alleged.
The wife relied on some emails which, she said, corroborated her version of the events.
There was an incident on 26 July 2004. The wife deposed that the husband pushed her and she hurt her knee. The husband deposed that she tried to trip him and fell over. On 27 July 2004 the wife sent an email to the husband stating, inter alia “I’m sick of the violence – the DVD remote is broken, the bedroom wall has a hole in it and my knee pains each time I take a step on my right leg”.
The husband responded, commencing with “Well stop accusing me like you did last night” and concluding “Sorry about your leg – how is it?”
The wife relies on an email sent 26 December 2009. At that time, the wife’s ongoing association with Mr F was a matter of dissention between the husband and the wife and the wife was actively involved in looking after Mr F’s dogs, helping him search for property to purchase in Queensland and had travelled three times to Queensland to look at property with Mr F. The husband said, “Amazing, my life is disentegtating (sic) before me, but not you, you say hang on and I’ll see if I can sort [Mr F’s] (sic) fucking dogs out first and then if its ok with them maybe I can fit you into their schedule. Well fuck you. If [Mr F] comes anywhere (sic) our house I will shoot the prick.”
There is no evidence that the husband owned a firearm or that he had any contact with Mr F.
The next email on which the wife relies was sent by the husband on 5 November 2011, after separation. The husband said, in relation to the wife collecting belongings from the house:
And you should talk. You faithfully promised me when we got back together in 2007 before we were married that you and [Mr F] were finally over. Then we had the daily phone calls, secret meetings, playing happy families with (sic) boyfriend when me (your husband) was told to stay at home. And all the rest of the shit – I’m just so over all your lying about you and (sic) boyfriend. Now you want to bring the other one around just to prove that you’re superior and to rub my nose in it. … we’ll do it in the week of the 28th. If you and he come out before then, expect a surprise. …
I do not accept that the emails to which the wife refers corroborate her assertions that the husband engaged in acts of family violence and she did not.
I accept that the relationship between the husband and the wife was fraught at times and that they argued and yelled. I accept that there was pushing and shoving and that cars were damaged. It is most probable that the behaviour was mutual.
I do not find that the behaviour which has been detailed is exceptional as contemplated in Kennon.
The husband’s use of funds post-separation
Both of the parties had money in the bank and superannuation entitlements when they separated in 2011.
The wife had $135,000 in the bank.
The husband had $235,000 in the bank and $244,000 in superannuation, a total of $479,000. Between separation in 2011 and the trial, the husband earned a taxable income of $290,457 in total. Both the income and the superannuation were liable to taxes and charges but there is no evidence of those amounts so the analysis that follows has some inaccuracies.
I note that an aide memoire prepared by senior counsel for the husband contained a different amount for the husband’s bank accounts but I cannot find any evidence to support it. The amount of $235,584.77 was asserted by the wife in her affidavit and she provided bank statements to support her assertion. That figure was put to the husband in cross-examination and he agreed that it was accurate.
At trial, the husband had no superannuation and $4,559 in the bank. Thus the husband had disposed of $474,500 in round terms since separation.
Of that amount, the following sums are either brought to account in the balance sheet or as having been spent:
Money held in his solicitors’ trust account $111,133
Paid costs $276,970
Paid costs in relation to another matter $ 25,000
Costs paid for searches $ 9,000
Improvements to C Town $ 38,000
Rates $ 15,000
Mortgage payments $126,000
Total $601,103
The wife contends that $426,320 should be added back. She has not demonstrated that it is reasonable to do so.
I also note that in the balance sheet the amount held in the solicitors’ trust account has been brought to account and that the husband’s paid legal fees will be added back. To that extent, some $388,103 has already been accounted for and thus the asserted addback double counts those funds.
If it had been the case that the wife sought to add back the difference between what the husband has spent or committed to legal fees and the amount which had been spent since separation, that amount would be $86,397 or about $17,000 per annum in circumstances where the husband’s income has been limited. In the year ended 30 June 2017, he earned $1,666; in 2016, $5,940; in 2015, $27,322; in 2014, $23,188 and in 2013, $42,545.
The wife has not established that it is reasonable to add back any of the money spent by the husband.
The capacity of each party for future employment
Each party claims little or no capacity for future employment.
The wife deposed that she is incapable of work by virtue of depression and anxiety related illness. She relied on the evidence of her general practitioner Dr R and her psychologist Ms S.
Dr R prepared a report dated 23 April 2016 in which she stated, inter alia, “[The wife] states the reason for her anxiety and depressive symptoms is due to the divorce proceedings associated with her former husband. Through the years I have seen her, the symptoms are more pronounced when documents and legal issues arise as she feels overwhelmed.”
Dr R concluded, “Prognosis depends on the outcome and time frame which the dispute will resolve. She will not improve from her current mental state unless the issues and legal proceedings in relation to her ex-husband are settled.”
Significantly, Dr R does not refer to any history of family violence.
Ms S produced three reports dated 28 April 2016, 19 October 2016 and 13 October 2017. In each of the three reports the following sentence appeared, “It is unlikely that she will achieve recovery whilst her legal issues remain unresolved and whilst she continues to have to deal with her ex‑husband’s repeated obstructive behaviours.”
In cross-examination, Ms S conceded that these proceedings have been a significant stressor for the wife and that, once the proceedings have concluded, her symptoms may abate.
It appeared from Ms S’s evidence in cross-examination that the focus of the therapy sessions, from about January 2014, was the litigation with a recurring theme that she was being thwarted in the litigation.
In re-examination, Ms S said that the wife’s great fear, expressed to her in her consultations, is that she will be left with nothing by way of property settlement and would have to pay the husband’s costs.
Ms S was not aware that, during the period from separation until the wife first consulted her in 2013, the wife was working full time as a consultant in a role for M Pty Ltd. Neither was she aware that, after the consultations commenced, the wife renegotiated and extended her contract with M Pty Ltd.
In the year ended 30 June 2011, the wife earned taxable income of $132,442. In 2012, she earned $187,840. In 2013 she earned $110,200; in 2014 she earned $102,078 and 2015 she earned $620. She also worked in 2016 and earned $15,539 and in the financial year ended 30 June 2017 she earned $51,017.
It is likely, having regard to the evidence of Dr R and Ms S, that, once these proceedings have been completed, the wife will be able to return to paid employment.
The husband has recently entered into a contract for consulting work that will produce income of about $36,000. In cross-examination, he said that he hopes to obtain further contract work.
I accept that the husband will not be able to produce income at the same rate as he did when he and the wife lived together running a successful contracting business through DPL, but it is likely that he will have some capacity to work in the future.
Both the husband and the wife have a capacity to earn income. I am unable to say that the capacity of either is greater or less than the other.
Whether the wife owes any money to Mr F
When G Town was sold, the wife received $100,000 and Mr F received the balance of about $535,000. Both the wife and Mr F assert that the sum of $100,000 was lent by Mr F to the wife on terms that it would be repaid when she could.
Thereafter, the wife spent various amounts for the benefit of Mr F including paying for property searches to assist Mr F to find another property, paying for a pest inspection on another property in which he was interested, and paying the stamp duty when Mr F purchased at Suburb V. The wife kept a schedule of the amounts which she asserted were spent on behalf of Mr F to demonstrate that she still owes him $58,834.
Mr F in cross-examination said that he had seen the schedule at some time but not recently.
Mr F said that he expected the debt to be repaid when the wife was in a position to do so.
In cross-examination, Mr F was asked whether he had made provision for the wife in his will. He said that he had not looked at his will lately. Pressed, about whether he has left Suburb V to the wife, he replied “Who else would I leave it to?”
I am satisfied that Mr F will not press the wife for repayment of the alleged debt unless she offers him repayment.
I do not propose to take the asserted liability into account on the balance sheet.
Whether the wife has any interest in the real property presently registered in the name of Mr F
Both the wife and Mr F gave evidence that they had agreed, on separation, that the property at G Town would be the property of Mr F and that the wife would make no claim against it.
Mr F is the registered proprietor of Suburb V. For the wife to have any interest in Suburb V, it would be necessary to prove that she acquired an interest by way of resulting trust or that there is an agreement between her and Mr F to that effect.
The onus of proof lies with the husband who asserts the interest.
The husband has not demonstrated, on the balance of probabilities, that either circumstance exists.
I am, however, satisfied, that the wife will inherit Suburb V when Mr F dies.
Whether that should lead to an adjustment of her interest in the matrimonial property is another matter. Mr F is 72 years old. He has diabetes and sleep apnoea but is otherwise in good health. He was cross-examined in the proceedings. I could not be satisfied that the likely inheritance is sufficiently proximate that any adjustment is appropriate.
Whether the wife owes any money to Ms P
The wife deposed that, shortly before her father’s death, he told her that he intended to change his will. In cross-examination, she said that her father told her that he intended to change his will so that the husband could receive no benefit from his estate. The wife’s sister, Ms P, was then the sole beneficiary.
The wife’s father died in December 2013.
His estate consisted of his half interest in Suburb N then held jointly with his wife, together with cash. The wife gave evidence that her father had inherited from his late brother a house, subsequently sold for $1,165,000, together with $50,000. Her father had $150,000 in cash. Thus the gross value of the estate of the wife’s late father was about $1,365,000 (less any selling costs and costs of administration) together with a half interest in Suburb N.
All of these assets are now held by the wife’s sister, Ms P.
In December 2016, the wife and Ms P entered into a Deed. The Deed was prepared by solicitors jointly instructed by them both and attached schedules which were prepared by the wife.
Schedule A to the Deed purports to create a liability by the wife to her sister arising out of the rental value of the Suburb N property where the wife has lived since 2011. The schedule commences with the premise, unsupported by any evidence, that, had the wife chosen to rent commercially in 2011, she would have paid $400 per week in rent. She, in fact, paid her parents $150 per week. Accordingly, the schedule purports to evidence a liability by the wife to her parents of $42,033.53.
Using, I assume, the same logic, the schedule ascribes a commercial rent for Suburb N at various times, from which a liability is said to arise from the wife to her sister for rent of $34,875.71. The schedule also records a further liability for utilities and repairs of $2,046.51 and loans totalling $25,000.
The total payable, according to the schedule is $61,922.22.
In her affidavit, sworn 10 April 2017, the wife deposed that her sister had lent her $75,000, that her debt for rent was now $47,745.71 and her debt for expenses for Suburb N was now $2,046.51.
In the balance sheet, the wife seeks to include a liability to her sister of $258,234. How that amount is calculated was not explained.
The wife’s sister was cross-examined about whether she would enforce repayment pursuant to the Deed if the amount had not been repaid by the due date which is 31 December 2017. She said that she would consider her position.
Both the wife and her sister in cross-examination said that they have a close relationship.
When the wife was in full employment and earning significant income, she gave her sister her motor vehicle when she purchased a new one.
The wife’s sister conceded that she had been enriched by the inheritance only because of the circumstances of her sister’s separation.
I do not accept that the wife will ever be required to repay any amount to her sister and I do not propose to include the asserted liability.
Whether the wife will receive any benefit from the estate of her late father
The circumstances whereby the wife was disinherited have been set out above.
It was an agreed fact that any claim pursuant to the Succession Act 2006 (NSW) must be made within a year of the death of the testator. Whilst there are provisions for applications to be made out of time, it is unlikely that the wife could adequately explain her delay, other than to say that she did not want to bring any entitlement to the estate within the terms of her property settlement.
In cross-examination, the wife said that she had chosen to make no claim because she honoured her late father’s wishes.
The wife’s sister, in cross-examination, said that she did not intend to make any provision for the wife once these proceedings have been completed.
Senior counsel for the wife submitted that the Court could find that it is likely that, after these proceedings have been completed, the wife will receive the equivalent of a half share of her late father’s estate. He submitted that the reason for the change in the will would have been achieved, that is, the husband would have received no benefit from the estate.
All of the matters surrounding the disposition of the estate of the wife’s father give rise to a strong suspicion that the wife will benefit after these proceedings have been determined. However, a strong suspicion is not sufficient to lead to a finding on the balance of probabilities.
The onus of proof has not been discharged and I am unable to find that the wife is likely to benefit from her father’s estate.
THE BALANCE SHEET
At the commencement of submissions the parties tendered a joint balance sheet. Insofar as the issues which appear on the balance sheet have not been determined earlier in these reasons, I will deal with them here.
| ASSETS | |||||||
| Ownership | Description | Wife's value | Husband's value | ||||
| 1 | Joint | B Street, C Town | 1,050,000 | 1,050,000 | |||
| 2 | Wife | W Street,, Suburb N | 162,520 | 162,500 | |||
| 3 | Joint | D Pty Ltd (deregistered) | NIL | NIL | |||
| 4 | Joint | E Bank t Account no. ...70 | 291 | 291 | |||
| 5 | Wife | E Bank account no. …35 | 394 | 394 | |||
| 6 | Wife | E Bank account no. …45 | 2,111 | 2,111 | |||
| 7 | Wife | Motor vehicle | 13,160 | 13,160 | |||
| 8 | Wife | JPL | NIL | NIL | |||
| 9 | Husband | OPL | NIL | NIL | |||
| 10 | Husband | Loan to OPL | 145,300 | NIL | |||
| 11 | Husband | ANZ Cheque account no. …84 | 3,197 | 3,197 | |||
| 12 | Husband | ANZ Online Saver Account no. …05 | 717 | 716 | |||
| 13 | Husband | Bankwest Saver account no. …2-4 | 14 | 14 | |||
| 14 | Husband | E Bank Account no. …57 | 297 | 297 | |||
| 15 | Husband | E Bank account no. …66 | 4 | 4 | |||
| 16 | Husband | E Bank account no. …85 | 4 | 4 | |||
| 17 | Husband | E Bank account no. …01 | 6 | 6 | |||
| 18 | Joint | NAB Business account no. …82 (D Pty Ltd) | 4,328 | 4,328 | |||
| 19 | Husband | ANZ Business Online Saver account no. …76 (OPL) | 12 | 12 | |||
| 20 | Husband | ANZ Business Advantage account no. …84 (OPL) | 309 | 309 | |||
| 21 | Husband | Motor vehicle | 9,600 | 9,600 | |||
| 22 | Husband | Tractor | 14,000 | 14,000 | |||
| 23 | Husband | Tradesman’s tools | 1,000 | Nominal | |||
| 24 | Husband | Funds held in Armstrong Legal Trust Account | 111,133 | 111,133 | |||
| 25 | Wife | Funds held in Barkus Doolan Trust Account | 44,805 | 44,805 | |||
| 26 | Husband | Household contents in the Husband’s possession | 12,000 | 3,000 | |||
| 27 | Wife | Household contents in the Wife’s possession or control | 500 | NK | |||
| 28 | Wife | Wife’s interest in Mr F’s property | NIL | NK | |||
| 29 W | Wife | Wife’s interest in Ms P’s property | NIL | NK | |||
| Total | $ 1,575,702 | $1,419,881 + NK | |||||
| ADDBACKS | |||||||
| Ownership | Description | Wife’s value | Husband’s value | ||||
| 30 | Husband | Funds retained by husband from D Pty Ltd | 62,000 | NIL | |||
| 31 | Husband | Superannuation entitlements utilised by the husband | 426,320 | NIL | |||
| 32 | Husband | Paid legal costs and disbursements | 276,970 | 276,970 | |||
| 33 | Wife | Paid legal costs and disbursements | 183,943 | 183,943 | |||
| Total | $ 949,233 | $ 460,913 | |||||
| LIABILITIES | |||||||
| Ownership | Description | Wife’s value | Husband’s value | ||||
| 34 | Joint | E Bank mortgage account no. …50 (C Town property) | 277,911 | 277,911 | |||
| 35 | Wife | Loan from Mr F | 58,834 | NIL | |||
| 36 | Wife | Loan from Ms P | 258,234 | NIL | |||
| 37 | Wife | E Bank credit card no. 5…57 | NIL | NIL | |||
| 38 | Wife | NAB credit card no. …23 | NIL | NIL | |||
| 39 | Husband | E Bank credit card no. …67 | NIL | NIL | |||
| 40 | Husband | Westpac credit card no. …09 | NIL | NIL | |||
| 41 | Husband | ANZ credit card no. …00 / …46 | NIL | NIL | |||
| 42 | Husband | Loan from Ms H Deane | NIL | 80,000 | |||
| Total | $ 594,979 | $ 357,911 | |||||
| SUPERANNUATION | ||||||||
| Member | Name of Fund | Type of Interest | Wife’s value | Husband’s value | ||||
| 43 | Wife | Australian Eligible Rollover Fund | Accumulation | 35,120 | 35,120 | |||
| 44 | Wife | MLC MasterKey | Accumulation | 332,386 | 332,386 | |||
| Total | $ 367,506 | $ 367,506 | ||||||
| FINANCIAL RESOURCES | |||||||
| Ownership | Description | Wife’s value | Husband’s value | ||||
| 45 | Husband | Deane Family Trust | Not Known | NIL | |||
| Total | $ NK | $ NIL | |||||
| NETT TOTAL ASSETS (including Superannuation) | $ 2,297,462 | $ 1,890,389 + NK |
Item 10 – the husband’s loan to OPL
OPL is the vehicle through which the husband conducts his consulting business.
The balance sheet of OPL at 30 June 2016 shows a loan owed to the husband of $62,295.
It is agreed that OPL has no value.
On behalf of the husband, senior counsel submitted that the only value to the husband of the loan account is that, if he earns income from consulting in the future, he can offset that income against repayment of the loan account, thus saving some tax.
I accept that submission.
The loan account will not be included as an asset nor, for the same reason, will it be added back, as was contended by counsel for the wife.
Item 23 – the husband’s tools
There is no evidence of the value of the tools. This item will be deleted.
Item 26 – the husband’s household effects
There is no evidence of value. The husband’s admission will be accepted.
Item 30 – funds retained by the husband from DPL
This claim has been dealt with at paragraphs 63 and following of these reasons. The amount will not be added back.
Item 31 – the husband’s spent superannuation
This claim has been dealt with at paragraphs 86 and following of these reasons. The amount will not be added back.
Items 32 and 33 – paid legal costs
There is no dispute that the paid legal fees of both parties should be added back.
Item 35 – debt to Mr F
This claim has been dealt with at paragraphs 111 and following of these reasons. The amount will not be included as a liability.
Item 36 – loan from Ms P
This claim has been dealt with at paragraphs 124 and following of these reasons. The amount will not be included as a liability.
Item 42 – loan from Ms H Deane
I accept that the husband will be required to repay this loan. However, I note that the husband has spent $388,103 on legal fees (including the money held in trust), whereas the wife has spent $183,943 and her solicitors hold $44,805, a total of $228,748.
The difference is $159,355.
The effect of allowing the debt to Ms H would be to cause the wife to bear a proportion of the liability.
The husband is free to spend as much as he wishes on legal costs, but he is not free to visit those choices of the wife.
The debt will not be included as a liability on the balance sheet.
I therefore find that the assets and liabilities of the parties are:
| ASSETS | |||
| Ownership | Description | Value | |
| 1 | Joint | B Street, C Town | 1,050,000 |
| 2 | Wife | W Street, Suburb N | 162,520 |
| 3 | Joint | E Bank Account no. ...70 | 291 |
| 4 | Wife | E Bank account no. …35 | 394 |
| 5 | Wife | E Bank account no. …45 | 2,111 |
| 6 | Wife | Motor vehicle | 13,160 |
| 7 | Husband | ANZ Cheque account no. …84 | 3,197 |
| 8 | Husband | ANZ Online Saver Account no. …05 | 717 |
| 9 | Husband | Bankwest Telenet Saver account no. …2-4 | 14 |
| 10 | Husband | E Bank Express Account no. …57 | 297 |
| 11 | Husband | E Bank account no. …66 | 4 |
| 12 | Husband | E Bank account no. …85 | 4 |
| 13 | Husband | E Bank account no. …01 | 6 |
| 14 | Joint | NAB Business Cash Maximiser account no. …82 (D Pty Ltd) | 4,328 |
| 15 | Husband | ANZ Business Online Saver account no. …76 (OPL) | 12 |
| 16 | Husband | ANZ Business Advantage account no. …84 (OPL) | 309 |
| 17 | Husband | Motor vehicle | 9,600 |
| 18 | Husband | Tractor | 14,000 |
| 19 | Husband | Funds held in Armstrong Legal Trust Account | 111,133 |
| 20 | Wife | Funds held in Barkus Doolan Trust Account | 44,805 |
| 21 | Husband | Household contents in the Husband’s possession | 3,000 |
| 22 | Wife | Household contents in the Wife’s possession or control | 500 |
| 23 | Husband | Paid legal costs and disbursements | 276,970 |
| 24 | Wife | Paid legal costs and disbursements | 183,943 |
| Total | $1,881,315 | ||
| LIABILITIES | |||
| Ownership | Description | Wife’s value | |
| 25 | Joint | E Bank mortgage account no. …50 (C Town property) | $ 277,911 |
| SUPERANNUATION | |||||||
| Member | Name of Fund | Type of Interest | Wife’s value | ||||
| 26 | Wife | Australian Eligible Rollover Fund | Accumulation | 35,120 | |||
| 27 | Wife | MLC MasterKey | Accumulation | 332,386 | |||
| Total | $ 367,506 | ||||||
| NETT TOTAL ASSETS (including Superannuation) | $ 1,970,910 |
There were no submissions directed to the manner in which the wife’s superannuation should be treated. She will be 60 years old in March 2018 and able to have access to her superannuation, whether by transition to retirement or otherwise, and I propose to treat her superannuation entitlements as property available for distribution.
The parties have net assets of $1,970,910. Of that pool, the husband has, or will retain, assets to the value of $1,196,912, or $919,941 taking into account the mortgage over C Town property. Since the husband seeks to retain the house and he operates OPL, the offset account and the OPL accounts will be assigned to him.
SECTION 79(2)
Both parties ask the Court to make an adjustment of their property. Their significant asset is the former matrimonial home at C Town which they can no longer use jointly and it is appropriate that their assets be apportioned.
CONTRIBUTION
Both parties worked as consultants during the marriage. Both contributed the fruits of their endeavours to their joint venture. Their contributions were equal.
SECTION 75(2)
The husband is 65 years old. The wife is almost 60 years old. They each have a capacity to earn income when these proceedings have been completed.
The wife has a longer prospect of earning than does the husband. If the wife achieves earnings on a level which she achieved in the years immediately after separation, she is likely to earn considerably more than the husband.
It is useful here to compare their respective taxable incomes from 2011 to 2017:
Year
Wife
Husband
2011
$132,442
$139,585
2012
$187,840
$189,796
2013
$110,200
$42,545
2014
$102,078
$23,188
2015
$620
$27,322
2016
$15,539
$5,940
2017
$51,017
$1,666
The table demonstrates that, since separation, the wife has earned $467,294 and the husband has earned $290,457.
Because there is a degree of uncertainty in the wife’s future earning capacity, I propose to make only a small adjustment in favour of the husband of 2.5 per cent.
CONCLUSION
The net assets of the parties will be adjusted as to 52.5 percent to the husband and 47.5 per cent to the wife.
She is entitled to $936,182. She has, in her possession (and including the amount she has paid in legal fees), assets to the value of $774,939. The husband must pay her $161,243.
LEGAL COSTS
The wife’s Initiating Application, filed in June 2013, sought a payment to her of $350,000. The husband in his Response sought an order that he pay her $100,000. By the time of the trial the wife sought $738,100 and the husband sought an order that he make no payment.
I have determined that the wife should receive $161,243. She has spent $228,748 on legal fees.
In the course of these proceedings the parties, between them, have spent $616,851 on legal fees which is almost one third of their present assets.
Exhibited to the wife’s trial affidavit were 116 separate exhibits. They were unpaginated so it is not possible to say how many pages there were. To give some idea of the volume, the exhibits, stacked on top of one another, measured 11 centimetres.
On my count, reference was made, in the course of the hearing, to 11 of those exhibits.
The husband, unsuccessfully, sought to file, shortly before the commencement of the trial, a second trial affidavit of some 78 paragraphs and 344 pages of annexure. He was not granted that leave and, as far as I am aware, none of the documents comprising the annexures were tendered.
Both of the parties would have been in a far better position than they are today if they had compromised these proceedings in 2013 by the exercise of common sense and some concept of proportionality.
I certify that the preceding one hundred and eighty-three (183) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 3 November 2017.
Associate:
Date: 3/11/2017
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