Maccaro & Maccaro
[2021] FCCA 700
•12 April 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Maccaro & Maccaro [2021] FCCA 700
File number(s): MLC 14983 of 2018 Judgment of: JUDGE RILEY Date of judgment: 12 April 2021 Catchwords: FAMILY LAW – property settlement – marital relationship – the husband having substantial assets at commencement of the relationship – the husband having schizophrenia – the husband being violent and abusive – the two children of the relationship now living predominantly with the husband – the wife wasting substantial funds on gambling and imprudent proposed property development. Legislation: Family Law Act 1975 (Cth) ss 75(2), 79(2), 79(4) Cases cited: Kennon and Kennon [1997] FamCA 27; (1997) FLC 92-757 (1997) 22 Fam Lr 1
Stanford v Stanford (2012) 247 CLR 108; (2012) 293 ALR 70; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; [2012] HCA 52
Number of paragraphs: 99 Date of last submission: 12 February 2021 Date of hearing: 9, 11 and 12 February 2021 Place: Melbourne Advocate for the Applicant: In person Solicitor for the Applicant: None Counsel for the Respondent: Alex Metherell Solicitor for the Respondent: Lyttletons
Table of Corrections 13 April 2021 Parties’ appearances have been inserted into the cover page. 13 April 2021 The date the final orders have been inserted into the orders page. ORDERS
MLC 14983 of 2018 BETWEEN: MS MACCARO
ApplicantAND: MR MACCARO
Respondent
ORDER MADE BY:
JUDGE RILEY
DATE OF ORDER:
12 APRIL 2021
THE COURT ORDERS THAT:
1.The funds remaining in the trust account of Lyttletons Lawyers on behalf of the parties (including interest) be distributed as to 60% to the husband and 40% to the wife.
2.The wife otherwise retain all assets, liabilities and financial resources in her name, possession and control to the exclusion of the husband.
3.The husband otherwise retain all assets, liabilities and financial resources in his name, possession and control to the exclusion of the wife.
4.Unless otherwise specified and except for the purposes of enforcing the payment of any money due under these orders:
(a)each party be solely entitled to the exclusion of the other party to all property (including choses in action) in the possession or name of such party as at this date;
(b)all insurance policies become the sole property of the beneficiary named therein;
(c)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled;
(d)each party be solely liable for and indemnify the other in respect of their individual debts;
(e)any joint tenancy of the parties in any real or personal estate be expressly severed;
(f)each party be solely entitled, to the exclusion of the other party, to all monies standing to their credit in their respective bank account; and
(g)each party forego any claim they may have to the superannuation benefits of the other.
AND THE COURT NOTES THAT:
Section 121 of the Family Law Act 1975 provides that it is an offence punishable by imprisonment for up to one year to publish or disseminate to the public any account of family law proceedings which identifies the parties, witnesses or other people concerned with the proceedings, unless specifically authorised by the court.
IT IS NOTED that publication of this judgment under the pseudonym Maccaro & Maccaro is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
This is an application for property adjustment under s.79 of the Family Law Act 1975 (“the Act”).
BACKGROUND
The husband is 48 years old and the wife is 45 years old. They commenced cohabitation in the Country B in 2003 and married in 2003. They commenced cohabitation in Australia in early 2005. The parties have two children, X and Y. X is now 16 years old and Y is now 15 years old. The husband said that the parties separated in 2010. The wife said they separated in 2009. On the husband’s assertion, the period of cohabitation was seven years, and on the wife’s, six years.
Following separation, the children initially lived with the wife. However, later, she was living in a rooming house, and the children lived with their father. Upon the wife obtaining suitable accommodation, the children resumed spending overnight time with her. By final parenting orders made by consent on 17 September 2020, X and Y are to live with the husband, and spend three nights a week with the wife.
The husband was diagnosed with schizophrenia 21 years ago, in 1999. The husband worked as a professional until mid-2009. Since then, he has been in receipt of a Centrelink disability pension. The wife is not currently employed. She asserted that she has various disabilities but her application for a disability pension has been rejected.
The wife asserted that the husband perpetrated serious physical, psychological and emotional abuse of her from shortly after their marriage until they separated. The wife alleged that the husband attempted to strangle and choke her. The husband denied any violence or abuse.
At the commencement of cohabitation, the husband had three properties, with various amounts of equity in them: a commercial property in M Street, Suburb C, an apartment in J Street, Suburb D and a unit in L Street, Suburb E. The M Street, Suburb C property was sold at the commencement of cohabitation. The husband asserts, and the wife disputes, that he sold the J Street, Suburb D property about one year after cohabitation, and put the proceeds into the former family home in K Street, Suburb F. The L Street, Suburb E property was sold following separation, and the proceeds of sale of $48,000 approximately, after reduction of the mortgage on the K Street, Suburb F property, were divided equally between the parties.
The former family home in K Street, Suburb F was sold in 2014 with net proceeds of about $441,000. The wife received all of the proceeds of sale, which she said the husband gifted to her, and bought a property in Suburb G for $462,000. The wife borrowed $360,000 against that property. She said the purpose of the borrowings was primarily to renovate the property and build a unit in the backyard. The wife gave a lot of the borrowings to a Mr H, with whom she was having a relationship, and who she understood was going to organise the building works. He did not do so. The wife also conceded that she spent large sums on overseas and domestic travel, and on gambling. The wife was forced to sell the Suburb G property in 2018, as she could not meet the mortgage repayments.
The proceeds of sale of the Suburb G property were $344,343.08 (due to an increase in the value of the property) and were placed in the husband’s solicitor’s trust account. The wife received a part property settlement of $25,000 on 17 September 2020 and the husband received a part property settlement of $25,000 on 21 December 2020. Each party received a further part property settlement by consent of $10,000 on 12 February 2021. The remaining balance, of about $270,000 plus interest, is the parties’ only significant asset, apart from the husband’s superannuation of about $60,000.
The dispute is about how the $270,000 plus interest should be dealt with. The husband said that he should receive 70% of it. The wife said she should receive 100% of it.
The husband was represented throughout the proceedings. The wife was represented for a relatively small part of the proceedings, and not for the trial. She speaks good English and did not require an interpreter.
CHRONOLOGY
The parties provided to the court a joint chronology, which became exhibit 6, and which was agreed except where otherwise indicated, and was substantially as follows:
Date Event 1972 The husband was born in Australia. 1975 The wife was born in the Country B. 1999 The husband was diagnosed with schizophrenia. 2003 The parties commenced cohabitation in the Country B.
The husband alleged that he sold a commercial office in M Street, Suburb C and received net proceeds of $35,000. The wife agreed that the commercial office was sold but disputed the amount of the net proceeds of sale.
2003 The parties married in the Country B. 2003 onwards The wife alleged that the husband perpetrated physical, psychological and emotional violence towards her and continued to do so throughout the marriage. The alleged violence included the husband attempting to suffocate and choke the wife.
The husband denied any violence.
2004 The parties’ first child, X, was born in the Country B. Late 2004 The husband returned to Australia from the Country B.
The husband sold the property at J Street, Suburb D, (“the J Street, Suburb D property”) for $185,000. The wife disagreed and said that the husband still owned the property.
Early 2005 The wife and X joined the husband in Australia. Mid 2005 The husband obtained work as a professional, earning $55,000 per year. 2005 The parties purchased the former matrimonial home at K Street, Suburb F (“the K Street, Suburb F property”) for $337,000. 2005 The parties’ second child, Y, was born in Australia. 2009 The parties took out a $60,000 loan secured against the K Street, Suburb F property.
The wife said this occurred before the husband became unemployed. The husband agreed that the parties took out a $60,000 personal loan. He said that this occurred prior to his asserted date of separation, being 2010. The husband said that the loan was used to meet living expenses.
Mid 2009 The husband became unemployed. August 2009 The wife said that the parties separated in Australia, after the husband’s continuous violence towards her and after an incident where the husband threw each of the children away from him, one of them leaving a dent in the fridge.
The husband disagreed that separation occurred at this time, and denied any violence.
2010 The husband said that the parties separated in Australia. The wife disagreed. 21 June 2010 The husband sold the property at L Street, Suburb E (“the L Street, Suburb E property”) for $460,000.
The proceeds of sale were used to discharge the mortgage against the L Street, Suburb E property and the K Street, Suburb F property, of $395,305.97, save that the $60,000 loan remained outstanding against the K Street, Suburb F property, following the settlement of the L Street, Suburb E property.
The net proceeds of $48,093 was divided equally between the parties.
2013 The husband said that the wife proposed to sell the K Street, Suburb F property and buy a new home for her and the children. The wife disagreed. 2014 The husband said that the children commenced primarily living with him. The wife disagreed and said that the children commenced living with the husband and the paternal grandparents in 2016. 12 March 2014 The parties sold the K Street, Suburb F property and received net proceeds of $441,078.43. A cheque for $441,078 was made out to the wife. 25 March 2014 The wife applied to Westpac for a $100,000 mortgage. The loan application stated that the wife had full time employment commencing in 2002, and an income of $1,229 per month.
The wife agreed that the loan application stated those things but said they were not true and that she has never had a job in Australia.
14 April 2014 The wife received a deposit of $365,000 in NAB account #...98.
The wife said that the funds came from the sale of the K Street, Suburb F property.
17 April 2014 The husband said that the parties purchased the property at M Street, Suburb G (“the Suburb G property”) for $462,000.
The wife disagreed and said that she purchased the property for $462,000.
The wife transferred the sum of $341,264 from NAB account #...98.
The wife also secured the $100,000 mortgage in loan account ending in #...93.
22 April 2014 The wife withdrew $20,000 cash from NAB account #...98.
The wife said that she forwarded the money to a Mr H, with whom she was in a relationship, for renovations.
28 April 2014 The wife withdrew $4,000 cash from NAB account #...98. 10 September 2014 The wife received a deposit of $11,925 into NAB account #...98. The wife said it was a rebate of stamp duty. 12 September 2014 The wife withdrew $9,000 cash from NAB account #...98. The wife said she gave this money to Mr H for the mortgage broker, etc. 14 November 2014 The wife applied to Westpac to increase the mortgage to $190,000. The loan application stated that the wife has $30,000 in superannuation and an income of $2,836 per month.
The wife agreed that the loan application said those things but said that they were not true, that she had no income or superannuation and that she lied to the bank to obtain the mortgage increase.
27 November 2014 The wife secured the $190,000 mortgage, in loan account ending #...92. The wife drew down $190,000. 28 November 2014 The wife withdrew $53,000 from NAB #...98. The wife said that she provided $53,000 to Mr H for the development of a unit at the back of the Suburb G property.
The wife’s loan account #...93 was closed.
1 December 2014 The wife withdrew $8,000 cash from NAB account #...98. December 2014 The wife withdrew lots of $2,000, $3,000 and $1,000 (twice) cash from NAB account #...98. 26 August 2015 The wife commenced receiving payments from Mr H. The wife said that the payments received from Mr H were in repayment of the $53,000 she gave to him, as the proposal to build the unit behind the Suburb G property did not go ahead.
The wife said that Mr H operated a business called N Company and that his contact number is ... .
The wife received approximately $32,400 in payments from Mr H in 2015 and 2016.
31 March 2016 The wife refinanced the Westpac mortgage to $350,000 in loan account #...97. The wife drew down $350,000. 4 April 2016 The wife deposited $135,000 into loan account #...97. 26 April 2016 The loan account #...92 was closed. 9 May 2016 The wife drew $15,000 from loan account #...97. 30 May 2016 The wife drew $15,000 from loan account #...97. 23 June 2016 The wife drew $10,000 from loan account #...97. 21 July 2016 The wife drew $10,000 from loan account #...97. 4 August 2016 The wife drew $20,000 from loan account #...97, marked “overseas”. 1 September 2016 The wife drew $5,000 from loan account #...97. 2 September 2016 The wife drew $10,000 from loan account #...97. 21 September 2016 The wife drew $5,000 from loan account #...97. 26 September 2016 The wife drew $5,000 from loan account #...97. January 2018 The wife listed the Suburb G property for sale. 2018 The wife disclosed to the husband for the first time through her lawyers that she has mortgaged the Suburb G property.
The wife disagreed and said that she told the husband in May 2017.
2018 The Suburb G property sold for $730,000. The net sale proceeds of $344,343.08 was deposited into the husband’s solicitor’s trust account.
The wife agreed but said that she did not want the proceeds to be placed in the husband’s solicitor’s trust account.
About 1 April 2018 The wife said that the husband told her that he had sold his business for $1,000,000. The husband denied this. 3 May 2018 The husband’s solicitor requested discovery through the wife’s solicitor. 2018 X was diagnosed with agoraphobia. 28 December 2018 The wife filed an initiating application in the Federal Circuit Court seeking property and parenting orders. 22 January 2019 The wife filed an application in a case seeking interim distribution of $30,000. 8 February 2019 The husband filed a response to the initiating application. 12 February 2019 Interim parenting and property orders were made in the Federal Circuit Court for discovery, a conciliation conference, the appointment of an independent children’s lawyer and for a trial date. 26 March 2019 The husband issued subpoenas to Westpac, NAB and the Commonwealth Bank of Australia seeking the wife’s bank records. 25 February 2020 The husband proposed interim distribution of $25,000 to each party, and $50,000 to be held for the children’s education expenses.
The wife rejected this proposal by SMS text message.
March 2020 The wife’s former solicitors, O Law Firm filed a notice of withdrawal as lawyer on behalf of the wife. 4 July 2020 The family report was prepared. 4 September 2020 The husband filed trial material.
Mr P filed a notice of address for service on behalf of the wife.
9 September 2020 Mr P filed a notice of intention to withdraw on behalf of the wife. 17 September 2020 Interim property orders were made providing for the wife to receive $25,000 part property settlement, on the undertaking that she will apply the funds to secure legal representation.
Final parenting orders were made in relation to the parties’ children, whereby the children will live with the husband and spend three nights a week with the wife.
20 November 2020 Q Law Firm filed a notice of address for service on behalf of the wife. 27 November 2020 Q Law Firm filed a notice of withdrawal as lawyer on behalf of the wife. 21 December 2020 The husband received a part property settlement of $25,000 pursuant to a court order.
MATERIAL RELIED UPON
The wife did not file an outline of case. After the final hearing was adjourned twice, firstly, on 17 September 2020, and secondly, on 21 December 2020, orders were made for the wife to file and serve any further affidavit she wished to rely on by 4pm on 1 February 2021, for the final hearing on 8 February 2021. The final hearing was adjourned administratively to 9 February 2021. The wife filed two affidavits at around 3pm on 7 February 2021. She sought leave to rely on these affidavits, and the husband did not oppose that. Those affidavits were:
(a)the wife’s affidavit sworn on 5 February 2021 and filed on 7 February 2021; and
(b)the affidavit affirmed by Ms R, a property conveyancer, on 5 February 2021 and filed on 7 February 2021.
Ms R was not required for cross-examination as her evidence was not disputed.
In his outline of case filed on 17 December 2020, the husband said that he relied upon:
(a)his further amended response filed on 16 December 2020;
(b)his unsworn affidavit filed on 4 September 2020;
(c)his financial statement filed on 4 September 2020;
(d)his affidavit sworn on 16 December 2020 and filed on 16 December 2020;
(e)the affidavit sworn by the paternal grandmother, Ms S on 16 December 2020, and filed on 16 December 2020; and
(f)the affidavit sworn by the husband’s solicitor, Ms T, on 15 December 2020 and filed on 16 December 2020.
Ms S and Ms T were not required for cross-examination.
Ms S said in her affidavit that:
(a)she is the husband’s 89 year old widowed mother;
(b)she owns her own house;
(c)she is on a Centrelink pension;
(d)the husband and children live with her; and
(e)on 25 September 2020, she entered into a rental agreement with the husband whereby he is required to pay her $500 per fortnight to assist with outgoings for the car and the house and for food.
Ms T provided detail about the husband’s legal costs. However, as the court does not take into account the legal costs of the proceedings in family law property proceedings, I will not summarise the effect of that affidavit.
The only witnesses required for cross-examination were the husband and the wife.
THE HUSBAND'S PROPOSAL
The husband proposed final orders in his case outline filed on 17 December 2020 as follows:
1.That Lyttletons Lawyers (trading as Anthony Rose & Mainwaring) (“Lyttletons Lawyers”) is forthwith authorised to release the sum of $25,000 to the Husband by way of part property settlement.
2.That the funds remaining in the trust account of Lyttletons Lawyers of approximately $318,747.08 (including interest on that sum) be distributed to the [husband].
3.That the parties’ superannuation entitlements be equalised.
4.That the [wife] otherwise retain all assets, liabilities and financial resources in her name, possession and control to the exclusion of the [husband].
5.That the [husband] otherwise retain all assets, liabilities and financial resources in his name, possession and control to the exclusion of the [wife].
6.That unless otherwise specified and except for the purposes of enforcing the payment of any money due under these Orders:
a.Each party be solely entitled to the exclusion of the other party to all property (including choses in action) in the possession or name of such party as at this date;
b.All insurance policies to become the sole property of the beneficiary named therein;
c.Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled;
d.Each party be solely liable for and indemnify the other in respect of their individual debts;
e.Any joint tenancy of the parties in any real or personal estate be expressly severed;
f.Each party be solely entitled to the exclusion of the other party all monies standing to their credit in their respective bank accounts; and
g.Each party forego any claim they may have to the superannuation benefits of the other.
THE WIFE'S PROPOSAL
The wife did not file a case outline which outlined the final orders she is seeking. However, she told the court that her proposal is that she should receive all of the monies held in the husband’s solicitor’s trust account, being about $270,000.
THE LEGISLATION
Section 79 of the Act gives the court power to alter the interests of the parties to a marriage in the property of the parties to that marriage. Subsection 79(2) of the Act provides that:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Subsection 79(4) of the Act sets out the matters the court must take into account when considering what orders, if any, should be made for the alteration of the interests of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last mentioned property, whether or not that last mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The matters to be taken into account under s.75(2) of the Act are as follows:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party’s role as a parent; and
(m)if either party is cohabiting with another person — the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
THE APPROACH TO APPLICATIONS UNDER S.79
In Stanford v Stanford (2012) 247 CLR 108; (2012) 293 ALR 70; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; [2012] HCA 52, the High Court explained the proper approach to an application under s.79 of the Act as follows:
37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. … The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
38.Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. … (footnotes omitted)
39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”. The question presented by s 79 is whether those rights and interests should be altered. (footnotes omitted)
40.Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act. (emphasis in original) (footnote omitted)
…
42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4). (emphasis in original)
Stanford requires the following matters to be determined in applications brought under s.79 of the Act:
(a)whether the parties have separated;
(b)the assets and liabilities of each party;
(c)the contributions of each party;
(d)the future needs of each party;
(e)bearing in mind all of the foregoing matters, whether it is just and equitable to make any orders altering the interests of the parties in their property; and
(f)what orders, if any, are just and equitable in all the circumstances of the case.
Stanford does not require these matters to be addressed in any particular order. In most cases, it would seem rational to consider them in the order set out above.
WHETHER THE PARTIES HAVE SEPARATED
The parties agreed that they had separated, although they disputed the date of separation. The wife said the parties separated in 2009, and the husband said they separated in 2010.
THE ASSETS AND LIABILITIES
A table of the parties’ agreements and disputes about their assets, liabilities, contributions and future needs became exhibit 7.
The parties agreed that their only joint asset as at the time of trial was the approximately $270,000 in Lyttletons Lawyers’ trust account. The parties agreed that they had no joint liabilities at the time of trial.
The parties agreed that the wife had individual assets at the time of trial consisting of $500 worth of furniture which was held in storage.
The husband alleged and the wife disputed that the wife had had the benefit of $365,000 by obtaining loans against the Suburb G property. The wife said that these funds had been spent on renovations, travel to the Country B with the children, living expenses and some had been given to Mr H for the construction of a proposed unit at the back of the Suburb G property. There is no reason to suppose that the wife has retained any of these funds. While the husband implied that these funds should be treated as an addback, it seems to me to be preferable to consider these funds in the context of post-separation contributions.
The husband also alleged and the wife disputed that the wife has a Motor Vehicle valued at $1,500. The wife denied that she still had that vehicle at the time of trial. She said that it was in poor condition and she gave it away. In the absence of any substantial evidence that the wife owns such a vehicle, or its value, I consider that it should be disregarded.
The parties agreed that the wife had no individual liabilities at the time of trial.
The parties agreed that the wife had no superannuation. (She asserted in a loan application that she had $30,000 in superannuation, but told the court that was a lie. The husband ultimately accepted that.)
The parties agreed that the husband had no individual assets at the time of trial, save that the wife alleged and the husband denied that:
(a)the husband sold his business in 2018 for $1,000,000; and
(b)the husband still retained the J Street, Suburb D property.
In relation to the sale of the business, the wife relied on a text message exchange between the parties which is contained in annexure -4 to the wife’s affidavit sworn on 5 February 2021. In that email exchange:
(a)the wife said on 14 April 2018:
Oh i thought you sold your business for a mil? Where is the money goes then?
You said that a few weeks ago.
(b)the husband replied on 15 April 2018:
I said that easter last week.
In answer to some questions from the court, the husband said that he did not recall sending that message and did not believe it came from his telephone. He said that he had never developed any business on his own account, and had only worked as a professional as an employee or on a contract basis. He said that he had an online business until about 2015 in which he bought and sold goods. He said he made about $100 per week or per fortnight from the business while it was operating. He said that he did not sell the business for $1 million or any other sum, as it was of no value.
The court book contained at page 163 a copy of the husband’s income tax assessment for the year ended 30 June 2018: exhibit 18. It showed that the husband was assessed to pay zero dollars of tax on his taxable income. One would have expected there to have been a capital gain and income tax on that capital gain in the 2018 income year if the husband had sold a business before Easter in 2018. While it is theoretically possible that the husband had numerous other deductions to offset against the capital gain, it seems to me to be more likely that he did not sell a business for $1 million or any other amount.
Having observed the husband giving evidence, I accept his claims in relation to his business. That is, I accept that he did not sell a business for $1 million or any other sum, and I accept that he does not have $1 million or any other sum secreted away from the proceeds of sale of his business.
In relation to the J Street, Suburb D property, the wife agreed that the husband had transferred the property in 2004 to a Mr U on 5 July 2005, but claimed that the husband had retained the beneficial interest in it. The husband produced some title searches which became exhibits 4 and 5. They showed that the property was transferred to Mr U on 5 July 2005. It was not suggested that the husband has any particular ongoing connection with Mr U.
The wife’s main complaint seemed to be that the husband had not provided her with a statement of adjustments. The husband said that the records had been destroyed because it was so long ago.
I find that plausible. There is nothing to substantiate the wife’s suspicion that Mr U holds the J Street, Suburb D property on behalf of the husband. I reject her claims in that regard.
The parties agreed that the husband had no individual liabilities at the time of trial, save that the husband alleged and the wife disputed that he had a capital gains tax liability of $62,984.85 arising from the sale of the L Street, Suburb E property on 21 June 2010. He said that, with interest, the debt was $99,251.28.
The husband produced exhibit 1, which is a very brief and not entirely informative statement from the Australian Taxation Office (“ATO”) regarding the husband. It shows that a debit of $62,984.85 was raised on 22 September 2015 with the description, “Re-raise of a non-pursuit amount – uneconomical to pursue”. It also shows additional general interest charge of $36,266.43 as at 22 January 2021.
The husband’s counsel advised the court that the ATO had indicated that it will not pursue the interest charge. The wife was not convinced that the ATO had any intention of recovering any of the debt.
On the basis of exhibit 1, I accept that the husband has a tax liability of $62,984.85. I do not know why that debt has been re-raised when it was previously assessed as uneconomical to pursue. However, I accept the husband’s concession that the ATO will not pursue the interest charge. Consequently, I accept that the husband has a tax liability of $62,984.85.
The parties agreed that the husband had $61,128.59 in superannuation at the time of trial.
Consequently, the assets and liabilities are as follows:
Joint assets: funds held by Lyttletons Lawyers: $273,747.29
Wife’s assets: $500.00
Wife’s liabilities: $0.00
Wife’s superannuation: $0.00
Husband’s assets: $0.00
Husband’s liabilities: ($62,984.85)
Husband’s superannuation: $61,128.59
Total: $272,391.03
The husband proposed that the parties’ current pool be split 70:30 in his favour; after taking into account the $35,000 that the husband and the wife have each received. The wife proposed that she should receive 100% of the monies held in Lyttletons Lawyers’ trust account, being about $270,000.
CONTRIBUTIONS
a. Initial contributions
The wife alleged that, at the commencement of cohabitation, she ran a business from home in the Country B which sold clothing. The wife said that she did not sell the business, but that she ‘just quit’. The husband denied that the wife’s business had any value.
As the wife did not claim that her business had any saleable value, it is not appropriate to take it into account for present purposes.
Apart from the clothing business, it was not suggested that the wife made any initial contributions.
The parties agreed that the husband’s initial contributions included a commercial office in Suburb C (which was sold at around the commencement of cohabitation). The husband said it had equity of about $35,000, which he used to fund his frequent trips to the Country B and to fund the wedding.
The wife argued that the equity in the M Street, Suburb C property was $100,000, as the husband had about $105,000 in the bank at that time. For that proposition, the wife relied a list of bank accounts with their balances. The husband did not dispute that it was a list of his accounts: exhibit 19. The list was undated, but relevantly showed that the husband had:
(a)$105,769.29 in credit in a V Bank account (which I understand to be a mortgage interest saver account);
(b)$139,752.44 in debit in a home loan account;
(c)a further $103,232.79 in debit in another home loan account; and
(d)a further $118,231.05 in debit in something described as a W Bank account.
Consequently, the $105,000 that the husband had in credit in the V Bank account was offset more than three times over by debits in other accounts. In the circumstances, I accept the husband’s evidence that his equity in the M Street, Suburb C property at the time of the commencement of cohabitation was about $35,000.
In any event, the wife’s claim that the husband had equity of $100,000 in the M Street, Suburb C property is actually against her interests, as it means that the husband contributed even more at the commencement of the relationship than he claimed.
The parties agreed that the husband’s initial contributions included the J Street, Suburb D property. The husband alleged it had equity of about $185,000. The wife disputed that. The husband said it was sold unencumbered in 2004, approximately one year after the commencement of cohabitation. The wife accepts that it was unencumbered but does not accept that it was sold. That is, she believes that the husband still owns it, and the title showing a transfer to another person does not mean that there was a genuine transfer. The husband says that the proceeds of sale were used to purchase the former matrimonial home at K Street, Suburb F. The wife says that the J Street, Suburb D property was not sold, so there were no proceeds.
As discussed above, I accept that the husband sold the J Street, Suburb D property in 2005 to Mr U. There was no evidence about the amount of equity in the J Street, Suburb D property, apart from the husband’s say so. However, I am inclined to accept the husband’s evidence about that matter, as it is clear that the parties eventually had some equity in the K Street, Suburb F property, and it seems plausible that some of that equity would have come from the J Street, Suburb D property.
The parties agreed that the husband’s initial contributions included the property at L Street, Suburb E. The husband claimed it had an estimated value of $230,000 at the commencement of cohabitation. The wife was not sure of the value. However, that value seems plausible, in view of it being sold in 2010 for $460,000. Nevertheless, the amount of equity in the L Street, Suburb E property at the commencement of cohabitation is unknown.
b. Contributions during the marriage
The parties agreed that the wife’s contributions during the marriage consisted of her engaging in home duties and being a stay at home parent.
The parties agreed that the husband’s contributions during the marriage consisted of him being employed until mid-2009 as a professional earning $55,000 per year and applying his income towards meeting the family’s expenses as well as the conservation and maintenance of the assets of the marriage.
In addition, the wife alleged that the husband perpetrated family violence towards her repeatedly from shortly after their marriage until the end of their relationship. The husband denied that. For the reasons which follow, I accept the wife’s evidence about these matters.
The wife said in particular that the husband had a psychotic episode when the parties were still in the Country B, in which he had strangled her. The husband denied that event, but, obviously, if he had been in a psychotic state, he would not have known what he had done.
The wife said that, on that occasion, the husband had failed to take his medication. The husband said that occasionally he would get his medication from another island but mostly his mother posted it to him in the Country B. He conceded that, on one occasion, there might not have been enough repeats available to him. He said that, when he returned from the Country B without the wife and X in late 2004, his father travelled to the Country B to travel back to Australia with him as “a comfort”. The husband conceded that, upon his return to Australia, his father arranged for him to be assessed by the CAT team, and he then spent a week or two in a psychiatric hospital.
In the light of this evidence, I accept the wife’s claim that the husband had a psychotic episode in the Country B and attempted to strangle the wife in 2004. The husband’s father was obliged to travel to the Country B to bring the husband home for treatment, which he received initially in a psychiatric hospital and then later in the form of ongoing medication.
In addition, the wife said that, when the parties were living in Australia, she passed out after the husband choked her in the hallway. The husband denied that he had tried to choke the wife, and said that he was only trying to comfort her because she was homesick.
In the light of all the evidence in this case, and having seen the parties in the virtual witness box, I prefer the wife’s evidence on this point.
The husband conceded that the wife did not have a mobile telephone, and the digital handset in the house did not have the capacity to dial triple zero. These circumstances are possibly indicative of controlling behaviour on the husband’s part. Obviously, for safety reasons, everyone should have the capacity to dial triple zero, particularly when children are involved.
The husband also conceded that his mother would stay with the family a few nights a week to assist them, although the wife said that she lived with them, and they only visited the husband’s father on weekends. This evidence, whether the husband’s mother stayed a few nights a week or all week, suggests that the husband was not entirely capable of caring for himself and his family without additional supports.
In Kennon and Kennon [1997] FamCA 27; (1997) FLC 92-757 (1997) 22 Fam Lr 1, the Full Court of the Family Court said:
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.
All in all, in my view, the wife’s contributions during the marriage were made more arduous than they ought to have been because of the husband’s violence and abuse and also because of his schizophrenia which required extra care, including his mother staying over at least a few nights a week.
c. Contributions post separation
The parties agreed that the husband’s post-separation contributions included the husband continuing to meet the repayments for the mortgage secured against the K Street, Suburb F property until it was sold on 12 March 2014. The husband met the mortgage repayments from his Centrelink benefits. However, the wife alleged that the husband missed some payments, and the mortgage was two payments in arrears shortly prior to the settlement of the sale of the K Street, Suburb F property. That may be so, but it is not significant in the overall scheme of things.
The parties agreed that the wife’s post-separation contributions included that the wife paid the rates and taxes associated with the K Street, Suburb F property until it was sold in 2014.
The parties agreed that the husband’s post separation contributions included the sale of the L Street, Suburb E property on 21 June 2010. The proceeds of that sale were used to discharge that the mortgage secured against the K Street, Suburb F property, except for a $60,000 loan, and the balance of the proceeds of sale of $48,093 were divided equally between the parties.
The parties agreed that the husband’s post-separation contributions included paying for the expenses of the children since they started living with him, in 2014, on his case, or 2016, on the wife’s case. In the light of all the evidence in the case and having seen the parties in the virtual witness box, I prefer the wife’s evidence on this point.
The parties agreed that the children lived with her, and she paid their basic living expenses from after separation until 2016.
In September 2020, the children began spending three nights a week with the wife. I consider that it is likely that each party largely paid for the expenses of the children when they were with that party.
Following the sale of the K Street, Suburb F property, the wife received the proceeds of sale, being a cheque for $441,078.43. The wife said that the husband gave her that money, and that should be the end of it.
However, as I tried to explain to the wife during the trial, even if the husband had given her that money, in family law proceedings, anything that either party owns can be divided between them, unless there is an applicable binding financial agreement that meets all of the legal requirements for enforceability. In a sense, it really does not matter for present purposes whether the husband gave the $441,078.43 to the wife or not.
In any event, the affidavit of the conveyancer, Ms R, sworn on 5 February 2021, contains an annexure which Ms R said was signed by the husband in front of her. The annexure notes the address of the K Street, Suburb F property and says:
With regards to the above sale please be advised that all proceeds from the settlement are going to my ex wife Ms Maccaro.
The husband said that the wife had said that she wished to sell the K Street, Suburb F property and buy a new home to accommodate the children. The husband said he agreed to that I find the husband’s evidence on these matters plausible, and, in the light of all the evidence in the case and having seen the parties in the virtual witness box, I accept it.
The husband’s instruction to the conveyancer does not mean that the proceeds were necessarily going to remain with the wife forever. And, as I have said, family law is such that even property that is owned by one party can be ordered to be transferred to the other.
In any event, having received the $441,078.43 as the proceeds of sale of the K Street, Suburb F property, the wife bought the Suburb G property on 17 April 2014 for $462,000. Clearly, the wife could have paid for the property, except for about $19,000, without any borrowings.
However, the wife wished to develop the Suburb G property, including by building a unit in the backyard. For that purpose she borrowed about $360,000. In her loan application, the wife said, falsely, that she had $30,000 in superannuation and an income of $2,836 per month. In fact, she had no superannuation and no income.
The wife said that she had given about $70,000 to Mr H for building purposes, of which he had repaid about $32,500. The wife said that she also spent an unknown amount of money on trips to the Country B, on her mother’s 70th birthday, on her brother who is a paraplegic, on trips with the children to Queensland, and on gambling.
One way or another, the wife was forced by the bank to sell the Suburb G property. The sale price was $730,000, and the proceeds of sale were about $345,000. If the property had not increased in value, the wife would have dissipated almost all of the value of that property.
d. Future factors
The parties agreed that the matters relevant to the husband’s future needs are that:
(a)the husband is 48 years of age;
(b)he is schizophrenic;
(c)he has unquantified ongoing medical expenses associated with the management of his condition;
(d)he has the care of the parties’ two children from Monday to Friday and meets their expenses when they are with him, approximately 60% of the time, plus their school fees, extra-curricular fees and other expenses; and
(e)the husband attends to X’s special needs related to his agoraphobia.
The parties agreed that the matters relevant to the wife’s future needs are that:
(a)the wife is 45 years of age;
(b)she is not presently employed;
(c)she has experience working in the hospitality industry; and
(d)she suffers from cervical spinal stenosis.
The husband alleged and the wife disputed that the husband has not been employed in a permanent position since mid-2009. In the light of all the evidence in the case and having seen the parties in the virtual witness box, I accept the husband’s evidence on this point.
The wife alleged and the husband disputed that:
(a)she has depression and was recently diagnosed with post-traumatic stress disorder; and
(b)the wife’s cervical spinal stenosis impedes her ability to work.
The wife’s application to Centrelink for a disability pension was rejected, on the basis that her conditions were not established or had not stabilised. One way or another, I consider that the wife has a very limited ability to work in Australia, as she has no educational qualifications here, and very little work experience.
WHETHER IT IS JUST AND EQUITABLE TO ALTER THE PARTIES’ PROPERTY INTERESTS
The parties agreed that it would be just and equitable to alter their property interests in this case. In view of paragraph 42 of Stanford, the fact that the parties are no longer living in a marital relationship and the various findings made above in relation to contributions and future needs, I also consider that it would be just and equitable to alter the parties' property interests in this case.
WHAT ORDER IS JUST AND EQUITABLE?
This is a very unfortunate matter. The husband obviously had a number of assets of significant value at the commencement of the relationship, and there is now only a small asset pool left.
If the wife had not borrowed against the Suburb G property, the proceeds of sale would have been about $730,000 instead of $345,000. That is a difference of $385,000. Alternatively, the wife and children would still be living happily in that house.
While some of the wife’s expenditures may be regarded as reasonable, such as trips home to spend time with her family, holidays in Australia with the children, and some expenditure on her family in the Country B, the unquantified amount spent on gambling can only be regarded as wastage.
The wife also made a foolish decision to give money to Mr H to develop the Suburb G property. While an investment decision that goes bad would not normally be regarded as wastage, giving money to a relatively new romantic partner, without any contracts, can only be seen as folly.
The evidence before the court does not allow for a precise quantification of how much money the wife wasted, and how much can be seen as reasonable expenditures. In my view, it is reasonable to proceed on the basis that the wife wasted about $200,000.
Taking into account all of the circumstances of this case, and in particular:
(a)the husband’s substantial initial contributions;
(b)the wife’s unduly arduous contributions during the relationship due to the husband’s violence and schizophrenia;
(c)the wife’s wastage of about $200,000;
(d)both parties having a very limited capacity to work;
(e)the husband having somewhat more care of the children than the wife; and
(f)the husband having a capital gains tax debt of approximately $60,000,
I consider that it is just and equitable for the funds held by Lyttletons Lawyers to be divided 60% in favour of the husband and 40% in favour of the wife, with no adjustment to superannuation.
In addition, there will be orders as proposed by the husband.
I certify that the preceding ninety-nine (99) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Riley . Associate:
Dated: 12 April 2021
Key Legal Topics
Areas of Law
-
Family Law
Legal Concepts
-
Consent
-
Remedies
-
Statutory Construction
0
3
0