Martell and Allard
[2012] FMCAfam 326
•13 April 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MARTELL & ALLARD | [2012] FMCAfam 326 |
| FAMILY LAW – Property Settlement – identification of assets – declaration as to parties’ interests- constructive trust – promissory estoppel– add-backs – inheritance - insurance proceeds - contributions – assessment of s.75(2) factors. |
| Family Law Act 1975, ss.75, 78, 79 |
| Hickey & Hickey (2003) FLC 93-141 Anthony Dickey, Family Law (5th ed, Lawbook Co., 2007) |
| Applicant: | MS MARTELL |
| Respondent: | MR ALLARD |
| File Number: | HBC 96 of 2011 |
| Judgment of: | Baker FM |
| Hearing dates: | 6 & 7 December 2011 |
| Date of Last Submission: | 7 December 2011 |
| Delivered at: | Hobart |
| Delivered on: | 13 April 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Trezise |
| Solicitors for the Applicant: | Dobson, Mitchell & Allport |
| Counsel for the Respondent: | Ms Mooney of Counsel |
| Solicitors for the Respondent: | Tierney Law |
ORDERS
Within 45 days the husband relinquish in favour of the wife, and where necessary transfer to her, any claim or interest he may have to or in:
(a)Property H;
(b)The wife’s Mitsubishi motor vehicle;
(c)Any bank savings, shares or investments in the sole name of the wife or under her control;
(d)The wife’s (omitted) superannuation entitlement.
Contemporaneously, upon compliance with order 1 the wife:
(a)Discharge or refinance the mortgage secured over Property H so as to release the husband from the liability secured by that mortgage; and
(b)Pay to the husband the sum of $77,969.00.
Within 45 days the wife relinquish in favour of the husband, and where necessary transfer to him, any claim or interest she may have to or in:
(a)Her interest in Property S,
(b)The husband’s Mitsubishi motor vehicle;
(c)Any bank savings, shares or investments in the sole name of the husband or under his control;
(d)The husband’s superannuation entitlement with (omitted).
The furniture and household items in the possession of the parties be divided between them by agreement in equal shares or as near to equal shares as is practicable. Failing agreement, the husband and the wife do all things necessary to place the furniture and household items with (omitted) for sale and the net proceeds of sale be divided equally between them.
In the event that the wife is unable to obtain finance to pay the husband the sum referred to order (2);
(i)The property situated at Property H be listed for sale;
(ii)The listing price shall be agreed between the husband and wife and failing agreement as determined by a valuer nominated by the President of the Real Estate Institute of Tasmania.
(iii)The property shall be listed for sale by a private treaty with an agent to be agreed and failing agreement as determined by an agent nominated by the President of the Real Estate Institute of Tasmania.
(iv)That the husband and wife both forthwith do all acts and things and sign all necessary documents to effect the sale of the property.
The proceeds of the sale of the property be distributed as follows:
(i)To discharge the mortgage and any other encumbrances affecting the property;
(ii)to pay all Real Estate agents costs, commissions and expenses of the sale of the property;
(iii)to pay any council and rates outstanding in respect of the property;
(iv) to pay the solicitors’ costs in relation to the property.
(v)The balance be divided between the husband and wife so as to ensure the wife receives a sum equal to 63% of the property pool and the husband receives a sum equal to 37% of the property pool.
Pending completion of the sale of the property the husband shall be solely responsible for the payments of the principal and interest of the mortgage secured over Property H and shall make all payments in relation to it.
Pending completion of the sale of the property the husband will be liable for and indemnify the wife against all payments and liabilities in respect of the property including but not limited to all rates, taxes and outgoings of whatsoever nature and kind.
Unless otherwise specified in this order:
(i)Each party will be solely entitled to the exclusion of the other to all property in the possession of that party as at this date;
(ii)Each party will be solely liable for and indemnify the other party against any liability encumbering any form of property to which that party is entitled pursuant to this Order;
(iii)Each party will remain solely liable for their respective debts.
IT IS NOTED that publication of this judgment under the pseudonym Martell & Allard is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT HOBART |
HBC 96 of 2011
| MS MARTELL |
Applicant
And
| MR ALLARD |
Respondent
REASONS FOR JUDGMENT
Introduction
These are proceedings for a property settlement pursuant to s.79 of the Family Law Act 1975 (“the Act”). They arise from an application brought by Ms Martell (“the wife”). The Respondent is Mr Allard (“the husband”).
The parties married in (omitted) 1989 and separated in March 2010. The wife is 42 years old, and the husband is 43 years old.
There are three children of the marriage (“the children”):
·X born (omitted) 1996 (“X”).
·Y born (omitted) 2000 (“Y”).
·Z born (omitted) 2005 (“Z”).
The children’s care is shared equally by the parties. At the hearing date, X was in ninth grade in (omitted) School, Y was in fifth grade at (omitted) School and Z was in prep at (omitted) school. It is the parties’ intention that the children remain at these schools.
Background
The husband has a background in (omitted). He works for the (omitted). His interests lie in (omitted), and during the relationship he held a variety of (omitted) positions. The wife has a background in (omitted). Although she currently does not (occupation omitted), during the relationship she became qualified as a (omitted) and practised as a (omitted) for a time.
The parties agreed that neither owned any significant assets at the commencement of their relationship. They lived at (omitted) College in (omitted), where both parties were studying. The husband was completing his (omitted), and the wife was an (omitted) at the (omitted). Both parties (omitted) at the (omitted) in exchange for board. The husband also worked as a (omitted).
It was the husband’s intention to work as an (omitted). He deposed that the usual career path for an (omitted) involved (omitted) study overseas. The parties decided to move to the UK for a working holiday.
At that time, the husband’s parents were living in a (omitted) provided by the (omitted). (omitted) is a town located in Northern Tasmania, approximately (omitted) from Hobart. The husband’s parents also owned a holiday property at (omitted). Mr B (“the husband’s father”) was an (omitted) at (omitted) until he retired in 1998. The husband’s parents are not parties to this application.
The wife had savings, and the parties decided to invest in a property in Tasmania before they departed for the UK. The parties purchased the Property S property with the husband’s parents as tenants in common in 1993.
Later that year, the parties departed for the UK. The wife obtained employment in (omitted). The husband undertook unpaid (omitted) work, and searched for a job.
Nine months after their arrival in the UK, the husband secured a three-year employment contract with (omitted). The wife secured a position in the (omitted), and the parties moved from (omitted) to (omitted). She worked at a (omitted) in (omitted) during her studies, and became qualified to practice as a (omitted) whilst the parties were living in the UK.
At the end of 1997, the husband’s employment contract with (omitted) came to an end. He was offered a job with his (omitted) in Hobart, and in February 1998, the parties returned to Hobart.
When they returned to Tasmania, the wife began study to become a (omitted) of the (omitted) College of (omitted). Subsequently, she became qualified to practise as a (omitted) in Australia. She began work with the (omitted), where she worked three and a half days per week. In 1998, she bought into that practice.
The husband started work with his (omitted), but funding cutbacks meant that his work hours decreased from four days per week to one day per week.
During this time, the husband owned and operated a home business and associated website called (omitted). This website generated a modest income through advertising revenue.
In April 2002, the husband started employment with the (omitted). During this period, the children attended day-care for three days each week.
In January 2002, the wife began treatment for major depression. In October 2002, she retired and has not worked as a (omitted) since.
Between 2002 and 2008 the wife’s depression fluctuated. Following the birth of Z in 2005, the mother suffered from postnatal depression. She was prescribed anti-depressants.
The wife was hospitalised between December 2008 and January 2009, and spent July, August and September 2009 in and out of hospital. She received electroconvulsive therapy (“ECT”) in August 2009.
During this period, the wife did not work in any capacity. The children continued to attend childcare.
The wife held an income protection policy with (omitted). The wife made a claim on the policy. In December 2002 she began receiving income payments of approximately $98,000.00 per annum (“the income protection payments”). She also made a claim on an insurance policy with (omitted). In July 2007, she received a lump sum payment of approximately $295,000.00, being the proceeds of a claim on the (omitted) life insurance policy for total and permanent disability (“the disability payment”).
In late 2007, the wife received an inheritance of approximately $113,000.00 from the estate of her great uncle (“the inheritance”).
Following their separation in March 2010, the parties remained living together until 30 May 2010. The wife then travelled to Canada for five months. The husband remained living in the former matrimonial home with the children. The wife returned to Tasmania at the end of October 2010, and moved into rental accommodation in (omitted), where she paid approximately $300.00 per week rent. In mid July 2011, the wife left the rental property and moved to live in her grandmother’s house.
The wife paid child support to the husband of $790.00 per fortnight. When she returned to Tasmania, the parties began a shared-care arrangement. The children spent approximately a third of each fortnight with the wife. She was still required to make child support payments to the husband under that arrangement.
In June 2011, the parties adopted an equal shared care arrangement for the children. The husband is required to pay to the wife child support of $946.75 per month.
In mid 2011, the wife travelled to the United States for a three day course in a form of (omitted) which she uses to help manage her anxiety, called (omitted). She undertook the course to become qualified to teach (omitted). She also visited friends and spent time camping. She spent five weeks overseas.
On 25 November 2011 (omitted) denied the wife’s entitlement to further income protection benefits on the basis that she is well and able to work.
Issues
The main issue in the matter was the extent of the parties’ interests in Property S. There were issues of add-backs and contributions.
Proposals
The wife sought a 70/30% division of the pool, as submitted by her, in her favour on the basis of a 60/40% division for contributions, and a 10% adjustment for s.75(2) factors. She sought orders to the effect that:
·The husband relinquish to the wife any interest or claim he has in the former matrimonial home located at Property H (“the former matrimonial home”); the Mitsubishi vehicle (“the Mitsubishi”); any bank savings shares or investments in the sole name of the wife; and, the wife’s (omitted) superannuation interests.
·The wife relinquish in favour of the husband any interest or claim she has in the Property S property; the Mitsubishi vehicle (“the Mitsubishi”); any bank savings shares or investments in the sole name of the husband; and, the husband’s (omitted) superannuation interests.
·Furniture and chattels be divided equally.
The husband sought a 60/40% division of the pool, as submitted by him, in the wife’s favour on the basis of contributions, and sought no adjustment for s.75(2) factors. He sought orders to the effect that:
·The wife be given the opportunity to retain the former matrimonial home, or alternatively, it be sold.
·The wife pay to the husband a cash payment sufficient to effect a 60/40% division of the asset pool, or alternatively he be entitled to that amount from the proceeds of sale of the former matrimonial home.
·The wife transfer to the husband her interest in Property S.
·Furniture and chattels be divided equally.
·The parties otherwise retain all assets.
Evidence
The wife relied upon the following:
·Initiating Application filed 8 February 2011.
·Her affidavit filed 13 July 2011.
·Affidavit of Dr J filed 30 November 2011.
·Financial Statement filed 30 November 2011.
·Outline of Case filed 2 December 2011.
The wife was cross-examined. Dr J was cross-examined by way of audio link.
The husband relied upon the following:
·Response to Initiating Application filed 24 March 2011.
·His affidavit filed 21 October 2011.
·Affidavit of the husband’s father filed 21 October 2011.
·Financial Statement filed 24 March 2011
·Outline of Case filed 2 December 2011.
·Amended Outline of Case handed up in Court.
The husband and the husband’s father were both cross-examined.
Both parties and the husband’s father were pleasant and courteous people and there was no hostility evident between them. All were credible witnesses.
Relevant law
Section 79(2) of the Act requires that any order made under s.79 must be just and equitable. Section 79(4) provides the matters which are to be taken into account when considering what order should be made.
Section 79(4) involves a four step exercise, [1] namely:
a)The identification of the property of the parties, their assets and financial resources.
b)The evaluation of the contributions.
c)The evaluation of the matters referred to in s.75(2).
d)A determination as to whether the result is just and equitable by considering the real impact of the orders in money terms.
In Omacini & Omacini[2] the Full Court of the Family Court of Australia identified three categories of cases where it is appropriate to notionally add back into the property pool assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC ¶ 92-816 the Full Court said at 85,262:
``11.6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.''
(b) Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC ¶ 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
``In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which
[79618]
would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband's receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.''
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC ¶ 91-092 at 76,644:
``As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec 75(2)(o) to applications for settlement of property instituted under the provisions of sec 79.''
When identifying the property of the party, decisions such as Chorn & Hopkins[3], Cerini & Cerini[4] and Gollings & Scott[5], are authority for the principle that monies reasonably disposed of by the parties in the conduct of their lives post-separation should not usually be added back.
In Cerini & Cerini [6], the Full Court said:
Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives.[7]
It is a well accepted principle that, in property cases, the Court is not required to assess the contribution of parties with mathematical precision. The reason for this is that many of the matters which the Court is required to take into account pursuant to s.79(4) are not at all capable of precise calculation, even if such calculation were desired.[8] The Court is required to consider the competing claims and relevant considerations broadly and fairly when making orders that are just and equitable.[9]
Identification of the assets
Asset-by-asset or global approach?
The difference between the asset-by-asset and global approaches was expressed by Ryan FM (as she then was) in the unreported case of DH & RM[10]:
The global approach involves the division of the parties’ assets on an overall proportion of the global view of the assets… [whereas] The asset by asset approach involves a determination of the parties’ interests in individual items of property…[11]
In the case of Norbis & Norbis[12] the Property H Court held that both the global and asset-by-asset approaches are legitimate.[13] Mason and Deane JJ, with whom Brennan J agreed, said:
…which of the two approaches is the more convenient would depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is more convenient. It follows that the Full Court is quite entitled to prescribe that approach as a guideline in order to promote uniformity of approach within the courts. In saying this we are not to be understood as denying the legitimacy of the trial judge’s ascertainment in the first instance of the financial contributions of the parties by reference to particular assets. It is difficult to conceive how the trial judge in many cases could otherwise take account of such contributions as is required by s.79(4) of the Act.
Again, it seems trite that it would depend on the circumstances of the particular case, although in the majority of cases the global approach would be the more convenient and for this reason the Full Court is entitled to describe its adoption as a guideline in the majority of cases. The Family Court is right to criticise the practice of giving over-zealous attention to the ascertainment to the parties’ contributions, and we take this opportunity in expressing our unqualified agreement with that criticism, noting at the same time that the ascertainment of the parties’ financial contributions necessarily entails reference to particular assets in the manner already indicated.[14]
While the global approach is generally more convenient, the Court can adopt the asset-by-asset approach if it considers it to be more appropriate in the circumstances.[15] Generally, this approach has been adopted by the Courts in those cases where the marriage is of a short duration, or where the parties have strictly separated their assets.[16]
Counsel for the husband asked the Court to adopt a limited asset-by-asset approach to the pool by asking the Court to consider Property S separately from the other assets of the parties. Counsel submitted that the Court should adopt this approach because the asset is held by four individuals and the unique issues of contribution and use which apply to that asset and none of the other assets.
The dispute about Property S was in regard to the extent of the parties’ interests in it. The asset needed to be considered separately to determine that interest. Once that was determined, the asset was not, in my view, sufficiently different from those other matrimonial assets to require separate consideration. It was more convenient to treat it as part of a single pool.
Agreed assets and liabilities
The parties agreed to the value of the following assets and liabilities:
Assets
The former matrimonial home $560,000.00
The Mitsubishi motor vehicle $20,000.00
The Mitsubishi motor vehicle $5,000.00
Wife’s cash at bank $2,200.00
(omitted) Cash Management account of the wife $1,726.00
Husband’s superannuation $112,317.00
(omitted) shares $345.00
Liabilities
Mortgage over the former matrimonial home $9,034.00
Husband’s Visa card debt $770.00
Disputed assets and liabilities
The following assets and liabilities were disputed:
a)The parties agreed the value of Property S at $225,000.00, but disputed the respective amount of their interests.
b)The husband sought that the sum of $11,000.00 be added back to the pool for the wife’s withdrawal from her (omitted) superannuation entitlement. He sought that the sum of $7,913.00, the sale proceeds of (omitted) shares, be added to the pool. The wife opposed the add-backs.
c)The wife asserted that the husband’s savings were $20,000.00. The husband asserted that they were $16,000.00.
d)The parties agreed the amount of the wife’s Visa card liability of $11,070.00. The husband asserted that this was a post-separation debt, which should not form part of the pool.
The positions of the parties regarding the disputed assets and liabilities can be summarised as follows:
Wife Husband
Property S $112,500.00 $24,187.00
(omitted) shares $Nil $7,913.00
(omitted) superannuation $81,000.00 $92,000.00
Husband’s savings $20,000.00 $16,000.00
Wife’s Visa card debt $11,070.00 $Nil
The husband’s financial statement indicated a balance of his savings of $16,627.00. He gave oral evidence that the amount of his savings were $16,964.00. I shall include that sum in the pool. There was no evidence to satisfy me that the husband had unreasonably expended funds post-separation, so as to include the amount at $20,000.00. He was not challenged about any expenditure made by him.
During the marriage, the wife maintained a (omitted) Cash Management account in her sole name. At the time of separation that account held approximately $6,000.00, and at the hearing it held approximately $1,500.00. She said that she generally made income tax payments from that account, as it was a high interest-earning account. Money has come in and out of that account since separation. The husband did not pursue an add-back in respect of this account.
Add-backs
The husband asserted that a further $11,000.00 should be included in the pool for the wife’s (omitted) superannuation’s fund.
On 9 March 2011 the wife withdrew $9,420.61 from the fund. She tendered a statement from her (omitted) Cash Management account showing a deposit into that account of $9,420.61 on 9 March 2011 from (omitted).[17]
During cross-examination, the wife said that she spent around $6,000.00 of it on an income tax liability, which had accrued from the income protection payments. She spent the remainder on re-establishing herself. She said that she was not permitted by the husband to move into the former matrimonial home in October 2010 upon her return from overseas. She therefore needed to re-establish herself in a rental property.
The wife said that her income protection payments were gross payments. The income tax she paid was incurred during the second half of 2010. She said some of the tax was incurred before then because she had paid less tax than she was required to pay, due to a misunderstanding of advice from her accountant. As a result she had a higher tax liability in 2010. There was no evidence of how much more that was.
I intend to include the sum of $6,000.00 in the pool. The wife was earning a gross income of $98,000.00 from her income protection payments. She should have been able to pay the income tax from that income, rather than use her superannuation. The balance, which she spent on re-establishing herself after leaving the home in October 2010 was not unreasonable in my view.
In March 2010, following separation, the wife sold a number of her (omitted) shares, which had been purchased during the relationship. She received $7,500.00. She said that she deposited the proceeds of sale into a new bank account under her sole name. She paid for her living expenses from that account, and also for her trip to Canada in 2010. The return airfare to Canada cost approximately $2,500.00, and she drew from that account during the five months she was overseas.
I consider that sum of $7,500.00 should be added back to the pool. The wife was overseas for several months. I consider that this was a “premature distribution of an asset of the parties”. I am not satisfied that it was reasonable for the wife to spend the funds which were not incurred on necessary living expenses and to assert the funds should not be included in the pool.
The wife’s Visa card debt
The parties agreed the value of the wife’s Visa card debt as approximately $11,070.00.
The husband asserted that this is a post-separation debt which should not be included in the pool. The trial date is the appropriate date upon which to ascertain the assets and the liabilities of the parties. The issue was whether the wife incurred the liability on meeting necessary living expenses and whether her expenditure was reasonable.
During cross-examination, the wife said that she spent the majority of the Visa card debt on various courses. She spent approximately $6,500.00 on a (omitted) course, which she undertook during 2011. She spent approximately $900.00 on the (omitted) course which she undertook during 2011 in the United States. She also paid for travel to and from the United States on the Visa card.
I do not consider that the husband should be required to contribute to the cost of the wife’s courses and holiday. There was no evidence that the wife has been able to earn anything but minimal amounts from either discipline.She was receiving income protection payments of $98,000.00 per annum at this time. I consider that this was not reasonable expenditure to which the husband should be required to contribute.
The Property S property
The value of Property S was agreed at $225,000.00. The legal title for the property reflects an arrangement whereby the parties and the husband’s parents are tenants in common in equal shares, each with an interest of 25%.
The wife’s position was that the parties and the husband’s parents each own a 25% share in the value of the property in accordance with the legal title and that the combined value of the parties’ interest amounted to 50% of the total value of the property, or $112,500.00.
Counsel for the wife submitted that the Court has no power to make a declaration under s.78 of the Act, except in respect of the property of the husband and wife. It was submitted that the Court could not impose a declaration in favour of the husband’s parents who were not parties to the proceedings.
The husband’s position was that the parties’ legal interest in the property is subject to a beneficial interest in respect of his parents. His position was that the combined value of the parties’ interest amounted to 10.75% of the total value of the property, or a value of $24,187.00. The husband detailed the parties’ contributions totalling a net contribution of $11,509.00. He detailed his parents’ contributions totalling $97,250.00.
In his Case Outline, in order to effect the transfer of property pursuant to the orders sought by him, the husband sought a declaration that the parties’ interest in the property is 15% of the total and that they hold their legal interest on trust for the husband’s parents, to the extent of their equitable lien over the property. This declaration was sought pursuant to s.78 of the Act. The husband asserted that the parties’ interest in the property was commensurate to their contributions.
By way of background, the parties wanted to purchase real estate in Tasmania prior to leaving for the UK in 1993. They decided to purchase Property S with the husband’s parents. The purchase price for the property was $62,500.00. The husband and wife paid a deposit of $6,250.00. The husband’s parents provided security for the loan by way of a second mortgage over their (omitted) property. A mortgage was obtained from (omitted) for the sum of $64,000.00. The title to the property was put into the joint names of the four of them, so that each person owned a 25% share.
It was agreed by the wife and husband that the property was bought for investment. The husband said that an investment in real estate by his parents could improve their long-term financial position. The wife said the long-term plan was to rent it out, pay off the mortgage, and then generate an income stream. At that time the husband’s father was expecting to retire at the age of 70.
The husband’s father said his intention for the purchase was to help the parties, by providing security for the mortgage. He said that he did not have any interest in keeping it as an investment for him and his wife. He said that because the parties were going overseas, he and his wife would manage it. They started keeping records of income and expenditure because they knew they would be looking after it.
Property S was rented through an agent between 1993 and 1998. An investment account was opened with (omitted) (“the investment account”) in their joint names, and each month the rental income less the agent’s commission was paid into that account.
Each month, an automatic withdrawal was made from the investment account, and that amount was automatically put towards the mortgage over Property S. The investment account was also used to pay the rates, maintenance and repairs.
Both the parties and the husband’s parents had access to the investment account, and made deposits and withdrawals into that account. The husband’s father said that, during the period between 1993 and 1998, he and his wife contributed approximately $15,238.96 to the investment account in total.[18] The wife accepted that the husband’s parents made contributions to the account, but disputed some of them.
In 1997, the husband’s father became ill, and decided that he would retire from his position as (omitted). He was 58 at the time. As he and his wife would no longer be eligible to live in the (omitted), they required new accommodation. They still owned their (omitted) property, however they considered it unsuitable as a home because it was so far from medical services, friends and family. They did not have the means to purchase another property, and the cost of renting was prohibitive. In light of the situation, the parties suggested that the husband’s parents move into Property S.
The wife said that the parties and the husband’s parents had not discussed any change in the ownership of the shares in Property S. She said:
We actually never discussed it in that much detail. Because [the husband’s father] was unwell, they needed somewhere to live, we had a house, it all just made a lot of sense… It was there, it was an opportunity, and they could have chosen to live there short term or not. To me it was a long-term investment.
The husband annexed to his affidavit an email dated 16 October 1997 from him to his parents.[19] The email reads as follows:
…
Basically, what are you going to do with the money from the sale of (omitted)? I’d recommend putting as much as you can into pay off Property S – if that means you have an 80% stake in it or whatever that is fine by us! If you can pay it off or even get close to that then you can use the income from the rent on it to help support you – maybe buying our share of the rent off us in return for a gradual increase in the share we own? Seems most sensible to be paying less interest as soon as you can. Means you at least have house which is all yours – more usable / more likely to be a source of regular income and much more likely to increase in value I’d have thought. Also, I’d have though (omitted) would not be that impressed with you selling the collateral on the loan for Property S anyway?
Also, with regards to Property S - *if* and only *if* the person renting it is thinking of leaving around February March time then we may well move into it. Again seems a pretty sensible money saver…
The husband said that he believed that the email indicated an agreement that the husband’s parents would own a larger percentage of Property S. He said:
As can be seen in [the 16 October 1997 email], I also suggested [the husband’s parents] could have all the rental income allowing [the wife and I] to increase our share back again. This email was based on the concept that the house would be continued to be rented out.
The wife disputed the husband’s interpretation of the email. She said:
I am not really sure what [the 16 October 1997 email] really means to imply, particularly the statement “maybe buying our share of the rent off us in return for a gradual increase in the share we own.” It is and was an investment property, owned by the four... of us in equal shares.
In early 1998 or late 1997, the husband’s parents sold the (omitted) property. The net proceeds of the sale totalled approximately $35,000.00. In March 1998 they paid $35,100.00 to reduce the mortgage secured over Property S.
In late June 1998, the husband’s father retired from his position as (omitted). He received a payment of $47,680.00 from (omitted) Superannuation. From that amount, approximately $24,250.00 was used to discharge the mortgage secured over Property S.
The husband’s parents moved into Property S in 1998. During 1998, they undertook building work on it. They renovated the kitchen, replaced plumbing, built a garage/workshop and replaced some electrical wiring. The husband’s father said that the cost of those works totalled approximately $28,343.00. He said that they also spent approximately $28,000.00 on additional repairs to the property since then.
The husband’s father could not recall a discussion with the husband and the wife in 1998. He could not recall discussing with them the payment of rent. He could not recall them saying that they gifted the property to him. The husband told him that they could remain at Property S as long as they were able. He did not discuss with the wife the legal entitlements to the property. She did not make any promises to him. At no time was he and his wife asked to pay rent or account for it. He agreed that for 17 or 18 years, the mortgage loan would have been reduced by rental payments.
The husband said that when his parents moved in, it became their house. There was never any discussion about rent or rental equivalent. The money was a gift to his parents in the end. It was no longer a commercial scenario.
During cross-examination, the wife accepted that the parents paid $35,102.00 and $24,265.00 towards the mortgage and $28,343.00 in respect of renovations. She did not agree that if they put money into the property they would receive the benefit of that. By paying off the mortgage with no rental payments, they were able to live there rent-free. She said that they never discussed that in detail. She said that it was always a long-term investment for all of them. She assumed that the husband’s parents were going to live in it as long as they could. It was not her assumption that the parties were making a gift to them.
It was put to the wife that it had always been the intention of the parties that the husband’s parents would be entitled to an ownership in the property directly commensurate with the amount they invested in it. She did not agree. She said that she had been of the view that they were merely living in the property. She was of the view that the husband’s parents paid off the mortgage on the property rather than pay rent to the parties. She said, “…I look upon it as… they almost paid their rent in a lump sum, at the beginning.”
The wife said that she would have otherwise expected to receive rental income from the property in the range of $100.00 to $150.00 per week, which would reflect the parties’ 50% share in ownership of the property. She said they never pursued the issue of rent, as they had no pressing need for that income.
The wife said that the husband’s parents moved into Property S in spite of the fact that the parties could have moved into it upon their return from the United Kingdom. She said that the parties and the husband’s parents regarded the property as “a source of accommodation available to us all equally.”
The wife said that the husband’s parents had told the parties that Property S was left in their will to them.
The wife said that throughout their relationship the parties always declared their interest in Property S as a 50% interest.
In late 1998 and following the discharge of the mortgage, the wife asked the husband’s parents if they would agree to a new mortgage over Property S to enable her to borrow funds to buy into the (business omitted). The husband’s parents agreed, and a mortgage was entered into. A mortgage secured over the former matrimonial home was used as collateral. Property S became fully encumbered. The wife had a business loan until she retired in 2002, when she discharged it.
It was put to the husband that when monies were borrowed, he had asserted that the parties had a 50% interest in the Property S property. He did not deny that, but said it was wrong of him to say that. He knew that the parties could not realise the property because his parents lived there. He was always concerned that they had not changed the title deeds.
The wife said that the husband only came to his current position about the ownership of the property following separation. She deposed that:
I consider [the Property S property] to be an investment property that [the husband’s parents], and not paying tenants, just happen to be living in due to the personal/life circumstances. As far as I am concerned, and as far as [the husband] was concerned until our separation, [the Property S property] remains an asset equally owned by all four of us.
During cross-examination, the husband’s father said that he investigated changing the legal interests in Property S in February 2000. He said that the date of “September/October 1998,” given by him in his affidavit, was the result of a computer error. In February 2000 he drafted a memorandum (“the memorandum”) to reflect what he believed to be the relative ownership of the property. He said:
…I drafted [the memorandum] in an attempt to document the respective entitlement of the owners of [the Property S property] given the changes that had occurred regarding the property since purchased in 1993 and particularly given the large contribution to the property by myself and [the husband’s mother], compared with, that by [the parties].[20]
He said that he gave the memorandum to the parties and that they indicated to him that they would sign it. They never did.
The evidence of the husband’s father was consistent with the wife’s evidence, when he said that the discussion about the title was brought up mainly since the husband and wife separated. He said that he and his wife became concerned about having to leave the home because they had sunk all their money into the property. They consulted their solicitor to change the title. They wanted to clarify the fact that they put their money in to the property and they wanted this to be recognised. They were told that it was expensive and unnecessary and that the memorandum would be sufficient. He said he thought that they had shown it to the husband and wife in February 2000. He said he could have given it to the husband. It was his recollection that he gave it to both of them when they were going out.
The wife said that she has no recollection of the memorandum, and said that she would not have agreed to a document in those terms. The husband said:
I was given a copy at the time for myself and [the wife] to sign but as best I can recall that agreement was not signed by the owners. I am not sure but I believe I discussed [the memorandum] with [the wife]. I recall there being an issue in actually formalising the agreement and we noted that to change the title deed to reflect the memorandum would cost thousands of dollars in stamp duty. My parents had talked to their solicitor… about it and as a result of what he suggested nothing formal was signed.
The husband said that he had no involvement with lawyers or with his father’s lawyer. He conceded that it was possible that he never presented the memorandum prepared by his father to the wife, but he recalled that he discussed it with his parents.
Submissions about the parties’ interest in Property S
Counsel for the husband submitted that a constructive trust should be imposed in favour of the husband’s parents, because it would be unconscionable for the husband and wife to deny their contributions, including making improvements to the property, which enhanced its value, and contributing to the discharge of the mortgage.
Counsel for the husband submitted that failing the imposition of a constructive trust, an equitable charge may suffice. She submitted that often an equitable interest is imposed in the absence of common intention.
Counsel for the husband submitted that there was an understanding that all owners held their interest commensurate with their contributions. Counsel relied upon the authority of Baumgartner & Baumgartner[21]. In that case, a constructive trust was imposed where a de facto couple had pooled their earnings and, on separation, the applicant had claimed that the house was his exclusive property because it was registered in his name. Mason CJ and Wilson and Deane JJ held that:
…the foundation for the imposition of construction trust in situations of the kind mentioned is that a refusal to recognise the existence of the equitable interest amounts to unconscionable conduct and that the trust is imposed as a remedy to circumvent that unconscionable conduct.[22]
Counsel for the husband submitted that the husband did not need to join his parents as parties in the proceedings. It was submitted that the court has power to determine the percentage interest of the wife in the property, which will be binding on the wife and the husband. The Court has the power to make a determination and declaration in respect of the parties’ interests, inter partes, because the husband’s parents will continue to live in the property and they will not be affected by any order. The husband is the only person who will be affected. There is no agitation by any party that the house be sold. The parents do not want to be parties. They are not in a position to come to court. The court still has the power to find that the wife’s interest is less than her legal interest.
Counsel relied on the authority of Sabell & Medhurst (No 2)[23] in support of her submission that the husband’s parents did not need to be parties. She submitted that in that matter, the trial judge had no hesitation in finding that he was able to make an adjustment to the parties’ interest in the Sydney property, but he did not need to on the facts of that case.
In Sabell & Medhurst (No 2)[24], the husband and wife were joint tenants of a 47% interest in the legal estate to a property, the remaining 53% being held by the husband’s mother, who held that interest as tenant in common with the husband and wife. The husband’s parents were not parties in the proceedings. The issue was whether or not the market value of the interest held by the husband and wife should be found to be $289,050.00 as contended on behalf of the husband, or $470,000.00 as claimed on behalf of the wife. Two market valuations were obtained on the basis of the husband’s parents holding a life tenancy as asserted by the husband, and a valuation not subject to a life tenancy.
In order to conclude which of the two valuations would be accepted, the Court was required to determine whether or not a life tenancy had been established. It determined that a life tenancy was not established and consequently the greater amount of the competing valuation of $470,000 applied.
The husband in that matter did not pursue the issue of a life tenancy, but rather made submissions on a category of promissory estoppel, that the wife be estopped from denying, inter-partes, that the husband’s parents had a right to occupy the unit for life. Rose J referred to the principles to be applied in relation to promissory estoppel, as set out by Brennan J (as he then was) in Waltons Stores (Interstate) Ltd v Maher[25]. Those principles are as follows:
[I]t is necessary for a plaintiff to prove that (1) the plaintiff assumed or expected that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.[26]
Rose J found on the evidence of what was agreed, that the wife was not estopped from denying that the husband’s parents did not have exclusive occupancy for their lives. Rather he found that they had exclusive occupancy for an indefinite period on the terms that they met the rates, levies and cost of maintenance and improvements to the property. His Honour considered that, following the judgment in Morris & Morris[27], the husband’s parents may have the benefit of an encumbrance to the title represented by an equitable charge. His Honour said that as the husband’s parents were not parties to the proceedings, his determination in respect to their rights was not binding upon them.
Counsel for the wife distinguished the authority of Sabell & Medhurst (No 2)[28] on the basis that the Court was not asked to determine the percentage of the respective interests in the property.
Counsel for the husband also relied upon the authorities of Morris & Morris[29], to which Rose J referred, Crafter & Crafter and Ors[30] and McKay & McKay.[31] In McKay & McKay[32] it was held that a co-owner who increased the value of properties was entitled to amounts for those improvements. Counsel for the wife distinguished these authorities on the basis that they involved parties in the proceedings who were seeking the benefit of constructive trusts.
Counsel for the wife submitted that on the facts in this matter, the principles required to establish a promissory estoppel, adopted by Rose J, cannot be established. The wife did not say anything to the husband’s parents to give them cause to believe that she had surrendered her 25% interest.
Counsel for the wife submitted that making the declaration sought by the husband was a back-door method of determining the interests of the husband’s parents and achieving a result for them. Counsel relied upon the authorities of Ireland & Ireland,[33] and Warby & Warby[34] and submitted that the court does not have the power to make a declaration of title of a third party, unless the third party is a party to the proceedings. In Ireland & Ireland[35], the wife commenced property proceedings against the husband in the Family Court of Australia. She sought an order restraining the husband from dealing with any of the assets of a trucking business. The wife claimed that the business was owned by her son of a prior marriage, C. The husband claimed that he and the wife owned the business. C was not a party to the proceedings. C argued that the Family Court had no jurisdiction to determine the respective interests of the husband, the wife and himself in the business. The husband argued that the Court had accrued jurisdiction.
Lindenmayer J expressed doubt whether the Family Court has the power to make a declaration in respect of the rights of third parties in such circumstances. It was held that even assuming that the Court had accrued jurisdiction to determine the respective interests of the husband, the wife and C in the business, the husband had not invoked that jurisdiction by any application. C was not a party to the property proceedings between the husband and wife and any order of the court would not therefore be binding on him.
Lindenmayer J said:
This Court is given no specific power by the Act to make declarations of title to property except as between husband and wife in proceedings between them with respect to existing title or rights in respect of property (sec. 78(1)) and, by sec. 78(3), the binding effect of any such declaration is expressly limited to the parties to the marriage.[36]
Conclusion about the parties’ interest in Property S
In proceedings between parties to a marriage, the court has the power to declare the title or rights that a party has in respect of property. The husband sought that the Court make a declaration that his and the wife’s interest in Property S is 15% of the total. The effect of such a declaration would be that the husband and the wife hold 35% of the legal interest in the property in trust for the benefit of his parents. However, the husband’s parents were not parties to the proceedings. They have not intervened to seek the benefit of a constructive trust or an equitable charge. The husband has not added them as parties. Such a declaration would not be binding upon them.
I consider that due to the factual circumstances of this matter it is not appropriate to exercise accrued jurisdiction and make the declaration sought by the husband. If I am wrong about that, and were to determine the issue of the respective interests in Property S, I make the following findings.
I consider the evidence indicated that, at the time of the purchase of Property S, the common intention of the owners was to be joint owners for the purpose of a future investment. They all became registered proprietors and entered into a mortgage loan with (omitted). Whilst the husband’s father said that he did not have any interest in keeping the property as an investment for him and his wife, the property was rented until 1998, and he deposited his stipends and income tax refunds into the account from 1993. There was no evidence that the husband’s parents intended to transfer the property to the parties when they returned from the UK. The rental of Property S ceased because the husband’s father became ill and retired, and he and his wife wanted to be close to services. It was then agreed that he and his wife live in Property S.
I consider that the wife did not agree that the parties’ interest in the property should change to be commensurate with their contributions. I accept her evidence that she did not see the memorandum prepared by the husband’s father and that she did not have discussions with the husband’s parents about the title. The husband accepted that it was possible that the wife did not see the memorandum. The husband’s father said that he had not discussed the legal entitlements with her. The wife recalled having discussions with the husband about the stamp duty costs, but that does not persuade me that she agreed to a change in the parties’ interest in the property. I am not satisfied that the wife induced the husband’s parents to adopt the assumption that she agreed to change the parties’ interest in the property commensurate with their contributions. I am not satisfied that the wife knew or intended that they would do so.
The discussions about contributions to Property S and about the stamp duty occurred after the parties separated. The husband’s parents became concerned that they may be required to leave the property. Before that, the husband asserted that on at least one occasion the parties held a one half share in it. That was when the wife obtained a mortgage secured on Property S to purchase her interest in the (business omitted).
Having regard to the evidence of the words and conduct of the parties and the husband’s father, I consider that the Court should not impose a constructive trust. I do not consider that there was a common intention that Property S was to be held on trust. I also consider that the wife was not estopped from denying that the husband’s parents’ interest in Property S was of a value commensurate with their contributions.
Counsel for the wife submitted that the payments and improvements made by the husband’s parents to Property S should be considered to be contributions made on the husband’s behalf, in the same way a gift from one spouse’s parents can be considered to be a contribution made on behalf of that spouse only. I accept this submission and consider that it is just and equitable to treat the contributions made by the husband’s parents to Property S as contributions made on behalf of the husband.
Conclusion as to the asset pool
Assets
The former matrimonial home $560,000.00
The Mitsubishi motor vehicle $20,000.00
The Mitsubishi motor vehicle $5,000.00
Savings of husband $16,964.00
Savings of wife $2,200.00
(omitted) Cash Management account $1,726.00
Husband’s superannuation $112,317.00
Wife’s superannuation $87,000.00
(omitted) shares $345.00
(omitted) shares $7,913.00
Parties interest in Property S $112,500.00
Total $925,965.00
Liabilities
Mortgage $9,034.00
Husband’s visa card liability $770.00
Total $916,161.00
Contributions of the parties
The wife is a (occupation omitted). She worked either full-time or part-time during the marriage. She contributed as a homemaker and parent during the marriage.
From 2002 the wife suffered major depression which affected her ability to earn an income. She received income protection insurance payments until November 2011.
The husband worked and had (qualifications omitted) in the first year of marriage and then had nine months without employment. He earned an income for three years in the United Kingdom. From 1998 until 2002 he worked part-time in paid or self-employment. From 2002 and for the last years of the marriage he worked full-time. He contributed as a homemaker and parent during the marriage and was primarily responsible for the children, during periods of the wife’s hospitalisation.
The parties made some financial and non-financial contributions to Property S during the marriage.
The parties agreed that in July 2007 the wife received a total and permanent disability lump sum payout of $295,481.00 from her (omitted) life insurance policy.
During cross-examination, the wife said that she had a superannuation policy and a life insurance policy with (omitted). The husband also had a life insurance policy with (omitted). The money she received was a payment from a claim on that life insurance policy for total and permanent disablement. The wife agreed that the payment was to compensate her for loss of future earnings.
Counsel for the husband submitted that the payment was for future economic loss and relied upon the authority of Horton & Horton[37]. It was conceded that although both parties decided to insure themselves and it was a policy that the parties jointly maintained, that the payment was overwhelmingly the wife’s contribution.
In Horton & Horton[38], the husband received an additional benefit, which was a portion of his superannuation payment. It was wholly the result of the husband contributing to disability insurance during his employment. It was calculated until ordinary retirement at 58 years and based on his past contributions over the period of his membership of the fund. Cohen J held that the additional benefit was an insurance payment based on the payment of the premiums. As the wife contributed indirectly to the monies used to pay the premiums, she contributed indirectly to the insurance payout. The character of the benefit paid was not for any aspect of pain and suffering, it was a calculation of a sum to compensate for future loss of earning capacity. Cohen J had no doubt that the insurance payout for additional benefit was like a payment of damages for future economic loss. He found that Aleksovski & Aleksovski[39] and Keenahan & Keenahan[40] did apply by analogy to it, but that both authorities permitted him to regard the wife as having made an indirect contribution to it. Cohen J said that Baker and Rowlands JJ in Aleksovski & Aleksovski[41] held that in a damages award the portion of it compensating pain and suffering, should be regarded as the sole contribution of the person who was awarded damages. He said that the judgment clearly said that with damages for economic loss, a direct contribution to marital property from such damages may be regarded as the sole contribution of the person suffering that loss. He said that the word “may” permits the alternative to be the case with damages for economic loss; i.e., that the plaintiff’s spouse may be regarded as having contributed to those indirectly.
Counsel for the wife relied upon the authority of Miller & Miller.[42]Strickland J sitting as the Full Court of the Family Court of Australia found that the trial Federal Magistrate did not make an error when she found that an insurance payment made to the husband as a result of a heart attack was not an equal contribution made by the husband and wife. The payment was made from an insurance policy for income protection in the event of ill health or injury. The husband was off work for a few weeks and then resumed full-time work. The wife argued that the payment was a windfall. Strickland J held that the payment was not a windfall. His Honour found that the fact that the premiums were made out of the parties’ joint funds can be treated as contributions by both parties. But it was not open to the wife to argue that the parties contributed equally to the payout. It was the husband’s money to which the wife made an indirect contribution of a relatively minor nature by jointly making the decision to take out the insurance and to pay the premiums jointly.
There was no documentary evidence of the insurance payment and how it was calculated. The wife indicated that the payment was to compensate her for loss of future earnings as a (occupation omitted). The payment seems to have been of the character of the additional benefit referred to in Horton & Horton[43], namely like a payment for damages for future economic loss. I consider that that the husband has made an indirect contribution to the insurance payment because the parties jointly decided to take out the insurance and jointly paid the premiums, however the contribution was not significant.
The husband gave the following evidence about how the proceeds of the lump payment from (omitted) were spent:
Donation to (omitted) $22,500.00
House extension on [the former matrimonial home] (approx)
$150,000.00
Overseas holiday 1 $32,300.00
Purchase of motor vehicle ((omitted)) $14,200.00
Tax (approx) $2,000.00
Legal opinion pay out $3,400.00
Spent on going to (omitted), ([The wife] on her own, attended a (omitted) in (omitted) in January 2010)
$11,700.00
The wife differed in her view of the expenditure of the lump sum payment by around $40,000.00. She recalled that this sum and the inheritance of $113,000.00, received in 2007 both went towards mortgage repayments. Notwithstanding this difference, the parties accepted that the funds were used towards the acquisition and conservation of property of the parties and to family expenses. They both agreed that around $190,000.00 of the lump sum and the inheritance was used to reduce the parties’ mortgage.
It was the husband’s case that the wife’s depressive illness debilitated her to such an extent that he was required to do the “heavy lifting” when it came to housework during the period between 2002 and separation.
The wife disagreed with this. She agreed that her illness impacted on her ability to help around the house, but that she still contributed significantly. She agreed that the husband did more than most other husbands, but said that each of the parties did what they could around the home. She said that they probably did an equal amount of housework.
The wife conceded that there were days during which she would stay in bed all day, but she said that those days were few. She said that on those days on which she had the children, she was able to feed them, but conceded that she was effectively “holding the fort” until the husband arrived home from work.
The husband deposed that, following the wife’s depression, she was often absent in the evenings and weekends and he took over most of care for the children during those times. The wife disputed this. She said that the husband was not at home much during the week. She said that he worked from eight to six on most days, and that sometimes he travelled to Melbourne or Launceston for work. Whilst she agreed she was sick with depression during that period, she said that she was still able to care for the children, and was able to manage “OK”. She said that even though there were some days when she was unable to do the cooking, washing and cleaning, they were “few and far between”, and that she did most of those tasks during this period of the relationship. She was able to do so because she was not working, and because the children were in day care. She said that in addition to those duties, she also took the children to and from school, attended parent-teacher meetings and attended after-school activities with the children.
The wife acknowledged that the husband assisted with domestic chores. She said that he did a lot, and that she always felt that they reasonably shared household chores, although she said that he did most of the grocery shopping.
Dr J gave evidence that she has been the wife’s treating psychiatrist since 29 April 2004. Over the years the wife has had a variety of treatments including several anti-depressant medications, in-patent therapy, trans-cranial magnetic simulation and course of ECT.
She deposed that the wife’s symptoms failed to respond to any treatment and the severity of her symptoms were such that she was unable to manage the care of her three children without significant support from her husband and friends. Since 2009 she has had a steady improvement in her symptoms.
After separation, the husband contributed by solely caring for the children when the wife went overseas for five months on one occasion and for five weeks on another occasion. He primarily cared for the children until mid 2011, when the parties started to equally share their care.
Since separation the husband’s superannuation has increased.
Since separation the husband had the benefit of living in the matrimonial home. The wife rented a property until she moved to her grandmother’s home in 2011, where she lives rent free.
Conclusion as to Contributions
Both parties contributed their income. They both worked hard and supported each other during the marriage. I consider that the husband was required to do more around the home and with the care of the children when the wife was hospitalised or debilitated when ill.
The wife received the inheritance of $113,000.00 in 2007, which was a contribution to which the husband did not contribute. She also received the total and permanent disability lump sum payment of around $295,000.00 in 2007. This was a significant financial contribution to which the husband made a small indirect contribution. Both sums were received three years before separation. Around $190,000.00 of the funds were used to pay off the mortgage secured on the matrimonial home. The balance of the funds was used for other expenses of the family.
The husband’s parents have made financial contributions towards Property S of around $98,000.00. They made improvements to the property. The property has increased in value, although there was no expert evidence of the amount the improvements increased its value or of its market increase in value. The property was purchased for $62,500.00 and it is now worth $225,000.00. The parties have not received any rent for the property since the husband’s parents moved into it. The contributions made by the husband’s parents were significant contributions made on the husband’s behalf.
I consider that having regard to all the evidence, there should be a division of the property on the basis of contributions, 60/40% in favour of the wife.
Section 75(2) factors
The wife is 42 years of age. Her income capacity is restricted. Her income protection payments have ceased and she now faces the possibility of litigation against the insurer to reinstate the payments.
The wife does not currently receive any government benefits, but during cross-examination she said that she has applied for the Newstart Allowance and that she had an interview with Centrelink the following week.
Dr J said that it is nine years since the wife has worked as a (occupation omitted). If she could work in such a capacity again she would need to retrain. In the future it is possible she will earn a small income as a (occupation omitted) and possibly through her (omitted) work. Dr J did not believe that she will be capable to work as a (omitted), or in any position that would generate a similar income, either now or at any time in the future.
Dr J was asked about a letter dated 25 November 2011 from (omitted) to the wife. (omitted) claimed that Dr J said that the wife was in full remission and has been fit for full-time work as a (omitted) since 30 March 2010.[44] Dr J said that she informed (omitted) that the wife was in full remission, but she did not recall saying that she was fit to return to work as a (omitted). The wife has not had a return of symptoms of depression for over one year, which means that she is in remission. This does not mean she is cured. She may stay like that for the rest of her life, she may not. Some of the indications of relapse are the severity of the depression and the frequency of relapse. She has been a long time sufferer of intensive depression and is on medication.
The wife lives with her current partner, Mr L, who is a Canadian national. He lives in Australia under a bridging visa, which means that he cannot work. He is in good health, and was financially dependent on the wife until the cessation of the income protection payments. He owns no assets. If his visa application is unsuccessful, he will have to return to Canada.
The wife pays the school fees for Y and Z, and the husband pays the school fees for X. The wife pays approximately $5,500.00 per child each year. The husband pays approximately $12,500.00 each year. The wife would like the children to remain at their current schools. If she does not continue to receive the income protection payments, she would continue to pay for the children’s schooling out of her superannuation
The husband is 43 years old. He is in good health. He is a (omitted) and receives an income of over $100,000.00 per annum. The husband’s employer contributes to his superannuation.
The husband has been assessed to pay child support to the wife in the sum of $946.00 per month. The care of the children will be shared.
The wife is hopeful that she can move back into the former matrimonial home. The husband will need to re-house.
The wife will retain the mortgage loan of $9,035.00. She will also have a visa card liability of $11,070.00 which was not included in the property pool.
Conclusion as to s.75(2) factors
There is currently a large disparity of income between the parties. The wife has the capacity to earn a modest income. It is possible that the wife could succeed in her claim against (omitted). This may take some time to resolve. If her claim succeeds, she will receive income protection payments.
The husband’s income and his capacity to earn income are superior to that of the wife. His capacity to increase his superannuation entitlement is superior to that of the wife.
The effect of my findings as to contributions is that the wife will receive property and superannuation to a value of $549,670.00. The husband will receive that to a value of $366,466.00. There is a large disparity of property between the parties.
I consider that there should be an award of 3% in favour of the wife. This will result in a 63/37% division in favour of the wife.
Is this just and equitable?
The wife will retain the following property:
Assets
Former matrimonial home $560,000.00
Mitsubishi motor vehicle $5,000.00
Cash at bank $2,200.00
(omitted) cash management account $1,726.00
(omitted) superannuation $87,000.00
($6,000.00 add back)
(omitted) shares (add-back) $7,913.00
(omitted) shares $345.00
Total $664,184.00
Liabilities
Mortgage loan – Property H $9,034.00
Cash payment to husband $77,969.00
Total$577,181.00
The husband will retain the following property:
Assets
50% interest in the Property S property $112,500.00
Mitsubishi motor vehicle $20,000.00
Savings $16,964.00
Superannuation $112,317.00
Cash payment from wife $77,969.00
Total $339,750.00
Liabilities
Visa card debt $770.00
Total $338,980.00
The wife may need to obtain finance to pay the cash adjustment to the husband. She is able to access $52,000.00 of her superannuation entitlement. If she does that, the amount of any loan she obtains will reduce. She may need to sell the home. I shall give her 45 days to apply for finance.
Each party will have a capital base to re-establish themselves, with that of the wife exceeding that of the husband by $238,201.00. Each party will retain superannuation.
I consider that this is a just and equitable result for the parties.
I certify that the preceding one hundred and sixty-three (163) paragraphs are a true copy of the reasons for judgment of Baker FM
Date: 13 April 2012
[1] Hickey & Hickey (2003) FLC 93-141 and Ferraro & Ferraro (1993) FLC 92-335
[2] (2005) FLC 93-218 at 79,617
[3] (2004) FLC 93-204
[4] [1998] FamCA 143
[5] [2007] FamCA 397
[6] Op Cit
[7] Ibidt at 46
[8] Anthony Dickey, Family Law (5th ed, Lawbook Co., 2007) at 532
[9] Ibid
[10] [2004] FMCAfam 74
[11] Ibid at 40
[12] (1986) FLC 91-712
[13] Ibid at 75,168, 75,174 and 75,178-75,179
[14] Ibid at 75,168
[15] Anthony Dickey, Family Law (5th ed, Lawbook Co., 2007) at 572
[16] McMahon and McMahon (1995) FLC 92-606
[17] Exhibit “W4”
[18] Annexure “C”
[19] Annexure “C”. The 16 October 1997 email was also annexed to the affidavit of the husband’s father filed 21 October 2011 and marked as Annexure “A”.
[20] Annexure “B”. The unsigned copy of the memorandum was also annexed to the affidavit of the husband filed 21 October 2011 and marked Annexure “A”
[21] (1987) 164 CLR 137
[22] Ibid at 147
[23] [2011] FamCA 596
[24] Ibid
[25] (1988) 164 CLR 387 at 428
[26] As quoted in Sabell & Medhurst (No 2) Op Cit
[27] (1982) 1 NSWLR 61
[28] Ibid
[29] Ibid
[30] [2011] FamCA 122
[31] [2008] NSWSC 177
[32] Ibid
[33] (1986) FLC 91-731
[34] (2002) FLC 93-091
[35] Op Cit
[36] Ibid at 75,317
[37] [2010] FamCA 160
[38] Ibid
[39] (1996) FLC 92-705
[40] [2004] FamCA 360
[41] Op Cit
[42] [2009] FamCAFC 121
[43] Op Cit
[44] Exhibit “W1”
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