Mateus and Angus
[2019] FCCA 422
•21 February 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MATEUS & ANGUS | [2019] FCCA 422 |
| Catchwords: FAMILY LAW – Property proceeding – de facto relationship of 17 years duration – modest net assets – each party seeks orders for property division – husband’s evidence unreliable – parties’ financial and non-financial contributions given equal weighting – wife has primary care and major responsibility for welfare of child including for the child’s living expenses since separation – minimal child support payments – orders just and equitable. |
| Legislation: Family Law Act 1975 (Cth), ss.90XT(1)(a), 90XT(4), 90SM(3), 90SM(4) Family Law (Superannuation) Regulations 2001 |
| Cases cited: Browne & Dunn (1893) 6R 67 Hickey & Hickey & Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 |
| Applicant: | MR MATEUS |
| Respondent: | MS ANGUS |
| File Number: | NCC 2071 of 2016 |
| Judgment of: | Judge Betts |
| Hearing date: | 22 August 2018 |
| Date of Last Submission: | 16 November 2018 |
| Delivered at: | Newcastle |
| Delivered on: | 21 February 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Eardley |
| Counsel for the Respondent: | Mr Rugendyke |
| Solicitors for the Respondent: | Rankin Ellison Lawyers |
ORDERS
The parties must do all acts and things necessary to effect a sale of the property situate at and known as Property A being the whole of the property contained in Certificate of Title Folio Identifier … (“the Property A property”).
Upon completion of the sale of the Property A property the Applicant and Respondent are to hold the proceeds of sale upon trust to pay from the proceeds thereof in the following manner and priority:
2.1.To the Australia and New Zealand Banking Group Limited, the amount necessary to discharge the mortgage secured over the Property A property;
2.2.All legal costs, auction costs if any, agent's commissions and all other expenses connected with the sale of the Property A property.
2.3.Any necessary rates and utilities adjustments;
2.4.The balance sale proceeds to be divided between the parties so that:
2.4.1.the wife receives the first $61,892.00;
2.4.2the leftover balance is divided equally between the parties.
NOTING THAT this order will result in an equal division of the net non-superannuation property of the parties consistent with the reasons for judgment herein.
Pending sale of the Property A property:
3.1 the husband is entitled to sole use and occupation thereof;
3.2the husband is to continue to meet all mortgage repayments, rates and utility expenses and will indemnify the wife in respect thereto;
3.3the husband is to keep the property in good order and repair and presentable for sale, fair wear and tear excepted.
In order to give effect to Order 1 it is further ordered:
4.1.The Applicant must forthwith list the Property A property for sale with a Real Estate Agent agreed by the parties and in the absence of agreement, the Real Estate Agent nominated by the President of the Real Estate Institute of New South Wales;
4.2.The listing price of the Property A property for the purposes of such sale is to be established by the Applicant and Respondent by agreement within seven (7) days and in the absence of agreement the listing price is to be the amount determined by a valuer nominated by the President of the Australian Property Institute;
4.3.The Applicant and Respondent are to agree the sale price of the Property A property and in the absence of agreement the sale price will be in the sum nominated as a fair market value thereof by a licensed valuer appointed by the President for the time being of the Australian Property Institute at the request of either party;
4.4.The Applicant must:
4.4.1. Execute all documents requested by the Real Estate Agent for the sale of the Property A property;
4.4.2. Execute the Contract for Sale;
4.4.3. Co-operate in every way with the Real Estate Agent in relation to the sale of the Property A property;
4.4.4. Instruct the Real Estate Agent to give the Respondent any and all information that he/she may reasonably require concerning the progress made from time to time with respect to effecting the sale of the Property A property;
4.5.If binding unconditional contracts for the sale of the Property A property have not been exchanged within 4 months from when the Property A property is first listed for sale pursuant to these Orders, the Applicant must forthwith list the Property A property for sale by public auction with an auctioneer appointed by agreement by the Applicant and Respondent and failing agreement with the auctioneer nominated by the President of the Real Estate Institute of NSW or his nominee;
4.6.The Applicant and Respondent must agree the reserve price of the Property A property and in the absence of agreement the reserve price will be in the sum nominated as a fair value thereof by a licensed valuer appointed by the President for the time being of the Australian Property Institute at the request of either party;
4.7.The parties must pay equally the advertising and associated costs of the auctioneer;
4.8.The Applicant and Respondent are to either personally attend the auction or be available at the auction and in the event that the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the Property A property at a price which is not more than 20% below the reserve price;
4.9.In the event that the Property A property is not sold at auction, the Applicant may leave the Property A property on the market for sale for 3 months and at the expiry of that time the Applicant must arrange for a further auction of the Property A property to be held forthwith and the provisions of these Orders will apply mutatis mutandis in relation to such further auction;
4.10.Whenever a valuer is engaged for an opinion or valuation of the property under these Orders then the valuer is to be treated by the parties as acting as an expert whose decision is binding upon the parties but who does not act as an arbitrator;
4.11.The parties are to pay equally between them any fees or charges incurred to any real estate agent or to any valuer engaged by the parties or to the Real Estate Institute in relation to the provisions herein relating to the sale of the Property A property.
Within 28 days of receipt by either party of any notice or demand from the Australian Taxation Office or the Australian Securities and Investment Commission, which demand or notice is properly payable by that party in relation to any of the companies Company B, Company C and/or Company D then the Applicant and Respondent must pay in equal shares the amount of the notice or demand.
Within 28 days the Applicant must deliver to the Respondent’s nominee at Property A, the following items of property:
6.1.Gold Fob Watch (gifted to Respondent by her grandfather);
6.2.Business memorabilia including but not limited to … sign in blue & white, … ash trays, … Statues, Bottles, knives;
6.3.… cradle and light;
6.4.Jewellery box and jewellery including White gold ring …;
6.5.Female bicycles in shed;
6.6.[X]’s bed;
6.7.[X]’s cheerleading medallions and soccer trophies.
A base amount of $38,265.00 is allocated, as required by s.90XT(4) of the Family Law Act 1975, to Mr Mateus out of the interest of Ms Angus in the SUPERANNUATION FUND (“the Fund”).
In accordance with paragraph 90XT(1)(a) Family Law Act 1975:
8.1.Mr Mateus is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
8.2.The entitlement of Ms Angus and the entitlement of such other person to whom a splittable payment may be made, to payments out of the interest of Ms Angus in the Fund is correspondingly reduced by force of this order.
The Trustee of the Fund ("the Trustee") shall do all such acts and things and sign all such documents as may be necessary to:
9.1.calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlement for Mr Mateus created by these orders; and
9.2.pay the entitlement whenever the Trustee makes a splittable payment out of the interest of Ms Angus in the Fund.
These Orders have effect from the operative time and the operative time is four business days after service of a sealed copy of these orders on the Trustee.
Unless otherwise specified in these Orders and as between the parties:
11.1.Each party shall be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these Orders and that for this purpose Bank accounts are deemed to be in the possession of the person whose name appears on the Bank’s record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof, superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements; and
11.2.Unless otherwise agreed herein each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
If either party refuses or neglects to sign within 14 days of a written request to do so any documents necessary to put into effect to all or any of the terms of these Orders the Registrar of the Newcastle Registry of the Federal Circuit Court of Australia is appointed pursuant to the provisions of Section 106A of the Family Law Act to execute such documents on behalf of the defaulting party and that:
12.1.The Registrar do all necessary acts and things to give force and effect to these Orders.
12.2.The defaulting party pay the costs of the other party on a solicitor/own client basis.
IT IS NOTED that publication of this judgment under the pseudonym Mateus & Angus is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT NEWCASTLE |
NCC 2071 of 2016
| MR MATEUS |
Applicant
And
| MS ANGUS |
Respondent
REASONS FOR JUDGMENT
Background:
These were bitterly contested de facto property settlement proceedings.
The Applicant in the proceedings is Mr Mateus, born on … 1961 and presently 57 years old (“the husband”). He was a disability support pensioner throughout the relationship and remains so.
The Respondent in the proceedings is Ms Angus, born on … 1971 and presently 47 years old (“the wife”). She works casually in customer service.
The husband and the wife commenced their de-facto relationship in … 1999, moving in together a few months later. They had one (1) child together, [X], born on … 2002.
Their de facto relationship subsisted for some seventeen (17) years or so, before finally breaking down in May or June 2016.
The husband commenced these proceedings in August of 2016 seeking both parenting and property settlement orders. Parenting matters were resolved in 2017 by way of consent orders, pursuant to which [X] lives with the wife; the wife has sole parental responsibility for her; and [X] chooses what time she wishes to spend with the husband (presently nil).
Their property trial proceeded to a contested hearing before me in August 2018. The trial was hotly-contested; there were significant factual matters in dispute.
Regrettably, the parties went to trial over what can only be described, respectfully, as a modest amount of property. Neither party is in a strong financial position; neither could really afford to conduct a three (3) day trial.
The fact that their competing proposals at trial were “poles apart” no doubt did not help matters.
Documents and evidence relied upon by the parties:
At trial, the husband relied upon:
a)his Amended Initiating Application filed 6 August 2018;
b)his trial affidavit filed 6 August 2018;
c)his Financial Statement filed 6 August 2018; and
d)his Case Outline Document.
The wife relied upon:
a)her Response filed 21 September 2016;
b)her trial affidavit filed 6 August 2018;
c)her Financial Statement filed 6 August 2018;
d)the affidavit of her father, Mr E, filed 6 August 2018;
e)her Case Outline Document.
During the course of the hearing, each party tendered various documents into evidence, some of which had been produced under subpoena. These documents were of considerable assistance to me in resolving some of the factual disputes concerning the past financial dealings of the parties.
The parties provided both oral and written submissions.
An issue arose in relation to the wife’s written submissions; the proceedings had to be called back on before me to resolve that matter. This hiccup, combined with the heavy state of my listings, has led to a delay in delivering judgment.
Observations about the evidence of the witnesses:
Each party came across very differently in the witness box. It is convenient if I first refer to wife’s evidence.
The wife as a witness:
For want of a better expression, the wife’s demeanour was “feisty” during much of the cross-examination.
She had a clear disdain for the husband, which was extended to his counsel. The wife was highly reactive to the content of questions asked, and at times she seemed barely able to contain herself when responding.
I have little doubt from watching the wife give her evidence that she is, and remains, very upset and angry at the husband and her perception of how he has behaved towards her over the years. She very much sees herself as a victim of his behaviour.
The wife was not fully frank with the court in relation to her current living circumstances. That said, I accept that from her perspective she believes she was subjected to family violence from the husband during their relationship and she remains anxious about the husband tracing her whereabouts. For this reason, she patently did not want to give any evidence to the court which might enable the husband to trace her whereabouts.
I do not consider that this matter on its own warrants a general adverse finding as to the wife’s credibility.
In cross-examination, the wife also accepted that when she was the owner of the … business between 2005 and 2007, she had banked the husband’s superannuation contributions into her own super fund. The husband’s counsel was highly critical of the wife’s credibility in this respect because:
(a)the wife failed in her legal obligations as a business owner – a formal complaint which rings rather hollow after all these years, particularly given the manner in which the parties’ financial affairs were intertwined at the time including that the wife’s income as business owner was being banked into the husband’s bank account;
(b)the wife was accused of failing to provide full and frank disclosure in that some of her current superannuation balance must logically be traceable to the husband’s super entitlements that she had been receiving during that period. But the amounts involved appear modest and the parties’ finances were intertwined. Moreover, I consider that the husband knew that this was happening at the relevant time. When observing her, the wife did not come across to me as being in any way evasive as to such matters. In short, I do not see this complaint as having any meaningful impact on the wife’s credibility.
Another complaint about the wife’s credibility was that her Financial Statement filed on 6 August 2018 had understated her superannuation balance as $23,762.00 whereas the up-to-date balance was in fact $34,470.00. While this is true, and could potentially warrant an adverse credibility finding, the fact is that the wife told her legal representatives that this figure was out of date and the correct figure was properly included by her counsel in the Wife’s Case Outline. I therefore reject the submission by the husband’s counsel that the wife in this regard made a “fundamental attempt to mislead the Court”. She told her legal representatives the true position and the matter was rectified before the trial commenced.
Overall, I generally found the wife to be an honest and reliable witness. Her palpable anger against the husband may, at least in part, be a direct reaction to his having fabricated evidence in these proceedings with a view to minimizing or defeating her property claim. I will turn to that matter later.
The husband as a witness:
The husband’s demeanour was in stark contrast to the wife’s. He remained composed, calm and seemingly quite rational throughout. Superficially, he came across as trying to assist the court in its assessment of the evidence.
However, I use the term “superficially” because, despite the husband’s seemingly calm and rational presentation, his evidence was substantially unravelled as the evidence came out. Significant parts of his evidence were palpably wrong, entirely at odds with contemporaneous objective records. Time and again, the husband refused to make appropriate concessions even when the independent objective evidence was put in his hands in the witness box. I will give relevant examples later in these reasons.
By the time the husband swore his trial affidavit, numerous contemporaneous documents had been subpoenaed. Those documents were at odds with the husband’s earlier affidavits in a number of respects. The husband dealt with that difficulty by re-writing history in his trial affidavit, simultaneously downplaying the discrepancies with his earlier material on the basis he had been “traumatised” by the proceedings when he swore his earlier material.
I reject the husband’s attempts to re-write history in the manner he did, which history (if true) was overwhelmingly favourable to his own case despite its being manifestly different to earlier versions of such “history”.
The husband denied behaving in a financially controlling way towards the wife during the relationship. However, it is clear that by and large he did in fact control the parties’ finances throughout most of the relationship.
The final orders sought by the husband were themselves the epitome of unreasonableness. At commencement of the proceedings his original proposal was that he would pay the wife a sum of fifty thousand dollars ($50,000.00) by way of property settlement – but by the time of trial this had morphed into a proposal that the wife pay him one hundred thousand dollars ($100,000.00). In my view his changed proposal, and the “corrected” evidence in his trial affidavit, were merely one last attempt by him at retaining the Property A property for himself and denying the wife any meaningful settlement.
In the end, I came to the view that the husband in fact holds a similar level of disdain for the wife as she holds for him. His calm demeanour in the witness box was merely a veneer. As will become apparent, I found the husband’s evidence to be palpably unreliable in many respects.
My finding that the husband holds a level of disdain for the wife is buttressed by his own counsel’s written submission in reply, which suggest that the wife ought to now be referred by the court to the Australian Taxation Office in respect of the wife’s receipt, as a business owner, of the husband’s employer superannuation contributions during the period 2005 - 2007. I reject this unfortunate submission which in many ways betrays the husband’s attitude – particularly where I can otherwise amply “compensate” him by way of super splitting orders as part of the exercise of arriving at a just and equitable property division.
Mr E:
Mr E was a very impressive witness and I have no difficulty accepting his evidence.[1]
[1] Even the husband’s written submissions conceded that Mr E was a witness of credit
In particular, I accept Mr E’s evidence that the wife never had any interest in the business at Suburb F; she was only ever an employee albeit employed on generous conditions. I accept that the relevant family trust through which Mr E and his wife operated the business is now defunct and that the wife was never a beneficiary thereof.
The law:
These proceedings are governed by the provisions of Part VIIIAB of the Family Law Act (“the Act”).
For present purposes, those provisions are the same as those applicable to married couples in Part VIII of the Act. The relevant case law in respect of Part VIII is equally applicable to Part VIIIAB.
In considering what property settlement order (if any) to make in the present case, I intend to follow a structured approach. In particular, these reasons for judgment will:
a)Firstly, identify and value the property, liabilities and financial resources of the parties;
b)Secondly, consider whether it is “just and equitable” to make a property settlement order;[2]
c)If so, then the third step will be to identify and assess the respective contributions made by each of the parties towards the net assets pursuant to s.90SM(4)(a), s.90SM(4)(b) and s.90SM(4)(c). For convenience, each party’s respective contributions-based entitlement will be expressed in percentage terms;
d)The fourth step will be to identify and assess what might be called the “future factors” (as relevant) contained in s.90SF(3), which are brought into consideration by operation of s.90SM(4)(e). I will also identify and assess the relevant matters set out in s.90SM(4)(d), s.90SM(4)(f) and s.90SM(4)(g) as relevant. Having done so, I will then determine what (if any) adjustment ought to be made to each party’s respective contributions-based entitlement. In carrying out this step I will be mindful not only of percentages (which are often convenient to the court) but also the underlying dollar figures that are involved (which are the practical consequence to the parties);
e)Finally, I will consider the effect of my findings and proposed orders so as to satisfy myself that my proposed property settlement order is “just and equitable”.[3]
[2] Stanford & Stanford (2012) FLC 93-518
[3] The pathway I am adopting is primarily based upon that endorsed by the Full Court in Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143, adapted by me to take into account the High Court’s decision in Stanford (supra).
Step 1 – Identifying and valuing the property, liabilities and financial resources of the parties:
For convenience, my findings are set out in Balance Sheet form below.
Non-superannuation property:
Item & Ownership
Value
Comment
Property A property (H)
$470,000
Agreed
Motor vehicle (H)
$12,000
Agreed
Home contents (H)
$5,000
Agreed
Boat (H)
$3,000
Agreed
Bank account #... (H)
Nil
Explained below
Bank account #... (H)
$389
Agreed
Bank accounts – total of #..., #..., #..., #...(W)
$868
Agreed
Husband’s cash moneys allegedly held on trust by the wife in respect of the Business, Suburb F
Nil
Explained below
Legal fees borrowed by Husband (H) – add back
$42,371
Explained below
Sub-total
$533,628
Mortgage over Property A property for legal fees (H)
($42, 371)
Explained below
Net non-superannuation assets
$491,257
Superannuation:
Item
Value
Comment
Super Fund 1 (H)
Nil
Explained below.
Super Fund 2 (W)
$74,859
Agreed
Super Fund 3 (W)
$34,470
Agreed
Total superannuation
$109,329
Grand total of superannuation & non-superannuation assets:
Grand total
$600,586
The add-back of legal fees of $42,371; the mortgage ($42,371); the Husband’s bank account #... (Nil):
These three (3) items of property are factually interlinked and it is convenient to deal with them together.
Pursuant to interim orders, the husband was authorised to borrow up to fifty thousand dollars ($50,000.00) for legal fees, to be secured by mortgage against the Property A property. The husband did borrow monies for legal fees, a mortgage was taken out, and at trial the mortgage balance was $42,371.00.
Pursuant to the interim orders, any legal fees borrowed by the husband were to be treated as an interim property distribution.
The parties take different positions in relation to these borrowed moneys.
The husband seeks to include the full amount of the current mortgage as a liability, but only seeks to include as a corresponding asset the lesser amount of $32,164.00 which remains in his ANZ bank account from such borrowings. In cross-examination he gave specific evidence that $27,000.00 of this sum was refunded to him by his previous solicitors. This evidence is not challenged by the wife. Though the husband did not give any specific evidence about the remaining $5,164.00 he asks me to infer that it also came from the borrowed funds.
On the husband’s approach, he effectively makes a “windfall gain” to the extent that the present mortgage balance exceeds what is presently left in his bank account. In my view, such a result would not only be unjust, but also contrary to the interim orders (or at least the spirit of the interim orders) pursuant to which the borrowings were to be treated as an interim property distribution.
The wife’s position is that the mortgage should be entirely disregarded and on that basis it is appropriate to also disregard any bank accounts in the husband’s possession to the extent their balance/s can be traced to the borrowed funds.
The wife’s suggested approach does not particularly attract me either, in that it ignores the existence of the mortgage which is quite a significant debt.
My approach – although also somewhat artificial – is to include the mortgage balance and then to “add back” as an asset on the husband’s side of the ledger a notional sum of money in the same amount. In this way the husband does not make a “windfall gain” and, equally, the court does not disregard the current mortgage balance.
As to the minor factual dispute concerning the $5,164.00, the wife submits that there is no evidence that it was sourced from the borrowed funds. Thus it should be added in as a separate asset.
The husband did not give any specific evidence as to the source of the $5,164.00 in circumstances where only he could have given that evidence. I have very serious concerns about the husband’s credibility (as will become apparent) and I regard much of his evidence with significant scepticism.
That said, on the balance of probabilities I consider it to be more likely than not that the $5,164.00 is in fact derived from the borrowed funds. I make this finding having regard to the husband’s financial position and particularly his status as a disability support pensioner. The husband’s income is only modest and it is not easy to see how he could otherwise have accrued such a sum if it was not borrowed. I have therefore excluded the $5,164.00 from the Balance Sheet on the basis that it forms part of the borrowed funds.
Alleged trust moneys (Business, Suburb F):
This was a highly contentious issue, the resolution of which has greatly diminished the husband’s credibility.
By way of background, in 2005 the wife’s family friends (the Beaumonts) sold to the wife’s parents a half share in the Business at Suburb F. The wife was thereafter employed as owner of the business and she remained in that role until the sale of the business in 2007.
The husband’s trial affidavit deposes that around May/June 2005, about the time when her parents acquired their half share in the business, the wife approached him to gauge his interest in acquiring a one quarter share in the business for $200,000.00. His evidence is that she told him that her parents would contribute $100,000.00 on her behalf but that the husband would need to pay the other $100,000.00 out of his own funds; he says he agreed to this proposal - physically removing $100,000.00 in cash from the safe at his Property A home and giving it to the wife.
The husband’s evidence is that the transaction was never documented; he explained in the witness box that it did not need to be because the parties were in a de facto relationship which involved mutual trust. There were no witnesses. Further, the husband never once discussed the transaction with the wife’s parents or with the Beaumonts despite the fact that he thereafter worked with the wife at the business for the next two (2) years and no doubt had many opportunities to discuss the matter with any of them.
The husband’s evidence was that, after sale of the business in 2007, he enquired with the wife about receipt of their one quarter share of the net proceeds, being some $350,000.00. She allegedly responded that they should leave that money with her parents to “accrue more interest”.
It is common ground that the $350,000.00 was never paid, nor did the husband take any steps to pursue payment from 2007 onwards.
The husband’s version of events was completely discredited in the course of the trial.
He had to concede that in his first affidavit filed in August 2016, he had failed to make any reference to these matters. His explanation - that his main focus at that time was on parenting issues – was glib and unconvincing.
The husband had only raised these allegations for the first time in his subsequent affidavit filed in December 2016. However, in that affidavit he had given a materially different version of events – namely that his $100,000.00 “investment” in the business had been withdrawn by the wife from one of the parties’ joint accounts.
By the time he swore his trial affidavit, the relevant bank statements had been subpoenaed - from which it would have been clear that the wife did not in fact withdraw $100,000.00 from the joint accounts.
Enter the husband’s latest version of events in the trial affidavit - that he had in fact given the wife cash of $100,000.00 from his safe. He said that the money was given to her in plastic shopping bags. He claimed to have only “remembered” giving her this cash when he opened the safe in more recent times and realised that the cash was no longer there.
It defies all credibility that the husband “forgot” that he had given the wife $100,000.00 in cash when he swore his affidavit in December 2016.
The husband never acted at any time as though he had an interest in the business. He did not at any time ever discuss with the wife’s family or with the Beaumonts, his (and the wife’s) alleged one quarter interest. They did not receive any “profit” share above and beyond what the wife was paid as an income (and the associated benefits). Upon the business’ sale, they never received “their one quarter share”.
It defies all credibility that, if the husband genuinely thought he was owed $350,000.00 upon sale of the business, that he sat idly by and did nothing to chase up payment, or part-payment, despite he and the wife being in clearly modest financial circumstances both at that time and in the following nine (9) years leading up to their separation.
Moreover, it defies all credibility that the husband would not even broach with the wife’s father the subject of the moneys allegedly owed - even so much as a casual query as to when he and the wife might be paid?
The husband’s case on this issue was certainly a difficult one to run. Ultimately his counsel in fact ran a more subtle argument – one which was forensically much more convenient for the husband’s case.
The husband’s counsel submitted that the wife must have misled the husband about the transaction and must have simply kept his $100,000.00 cash for her own (unstated) purposes. The husband’s counsel made detailed submissions that as a result, the wife now holds such moneys for the husband on a trust, and/or pursuant to principles of promissory estoppel.
On the basis of this new position, the husband’s counsel was entitled not to – and did not in fact - ask a single question of the wife’s father as to the parties’ alleged quarter interest in the business. After all, on this latest manifestation of the husband’s case, Mr E could not assist the court as he was not a party to the so-called “private” agreement between the husband and the wife.[4] Moreover, the husband admitted that he had never once discussed the matter with Mr E.
[4] Conveniently for the husband there were of course no other witnesses to the “private” agreement.
The convenience to the husband of alleging that he had access to $100,000.00 in cash in his safe is obvious - such an allegation is impossible to categorically disprove, as is its alleged payment by him to the wife.
For her part, the wife vehemently denied any “private” agreement with the husband as alleged, that any such discussions even took place, or that he ever gave her $100,000.00 cash at any time.
I accept the wife’s evidence on this topic, and reject that of the husband.
I am in fact comfortably satisfied that the husband’s latest version of events was no more than a fabrication. It was a desperate attempt by him to side-step the forensic reality that the subpoenaed bank records did not support his December 2016 version of events. The husband simply lied.
His likely motivation for giving this false evidence was that its acceptance would have the effect of artificially increasing the value of the matrimonial property to be divided – thus increasing the prospect of him being able to retain the Property A home.[5]
[5] Absent a finding that the wife holds significant monies on trust for the husband as he alleges, the Property A property is the only non-superannuation property of any significant value.
In closing, I do not accept that the husband even had $100,000.00 cash in the safe at the material time. That aspect of the matter will be addressed later in the context of contributions.
Husband’s Superannuation with Super Fund 1 (Nil):
At separation, the husband had $6,721.00 in his Super Fund 1. He cashed it in to pay legal fees. The husband gave evidence that he in fact received less than $3,000.00 by the time that the various expenses/taxes etc were deducted by the super fund.
Given my serious concerns as to the husband’s credibility, I am reluctant to accept that assertion in the absence of an independent document.
Nonetheless, the reality is that the husband’s superannuation balance is now nil. The wife submits that I should ‘add back’ the husband’s superannuation but I do not propose to do so. Rather I will consider the matter later in the context of post-separation contributions.
Company B, Company C and Company D:
In the later years of the relationship, the parties established the above companies. They would appear to have been joint enterprises.
Though neither party sought to include the companies in the Balance Sheet, each is seeking specific different orders in relation to the companies. In the circumstances it is appropriate that I briefly touch upon the companies here.
I start by observing that there is no evidence that any of those companies holds any assets of any value. If anything, the evidence establishes that there is a potential liability attaching to the companies - particularly Company D which has the potential to incur taxation and/or GST penalties as a result of its past trading activities.
None of the entities have yet been wound up. The wife tried to submit that possible winding-up costs should be included as a liability but she ultimately abandoned that claim on the evidence before me at trial. Such liabilities would, after all, be company debts and not personal debts of the parties.
The parties’ competing proposals as to these companies will be addressed at the conclusion of these reasons.
Step 2 – Considering whether it is “just and equitable” to make a property settlement order in this case:
In its decision of Stanford & Stanford (2012) FLC 93-518, the High Court of Australia elaborated upon and clarified the statutory requirement that the court not make any property settlement order pursuant to Part VIII (and by analogy, Part VIIIAB), unless it is “just and equitable” to do so.[6]
[6] The High Court was referring to s.79(2) but by analogy the decision also applies to s.90SM(3).
In their plurality judgment, French CJ, Hayne, Kiefel and Bell JJ held that:
a)In every case in which a property settlement order is sought it is necessary to satisfy the court that in all of the circumstances it is “just and equitable” to make such a property settlement order [s.90SM(3)];
b)The expression “just and equitable” is qualitative description of a conclusion reached after examination of a range of potentially competing considerations and does not admit of exhaustive definition. It is not possible to chart its metes and bounds. There are three (3) fundamental propositions which must not be obscured:
i)First, the court must begin a 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 [section 90SM(3)] 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;
ii)The power to make a property settlement order must be exercised in a principled fashion, and it cannot be answered by assuming that the parties rights to, or interests in, matrimonial property are or should be different from those that then exist;
iii)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 by reference to the matters set out in [section 90SM(4)]. To conclude that making an order is “just and equitable” only because of, and by reference to the [section 90SM(4)] considerations, without a separate consideration of 90SM(3) would be to conflate the statutory requirements and ignore the principles laid down by the Act.
Having already set out the parties’ property earlier, I note that this was a fairly lengthy relationship, in which the parties’ income and assets were intermingled. At the end of the failed relationship the husband finds himself in possession of the overwhelming majority of the assets. The wife in contrast holds only very modest property.
Each party contends that it is “just and equitable” to make a property settlement order in this case, albeit in different terms.
In the circumstances I am satisfied that it is “just and equitable” to make a property settlement order in this case.
Step 3 – Assessing the respective contributions of the parties:
Given the length of this relationship I propose to assess contributions in a broad-brush manner, consistent with the authorities.
In the exercise of my discretion, I propose to divide the property into two (2) separate categories for the purposes of the contributions assessment.[7] The first category is the non-superannuation property and the second category is the superannuation. Some of my findings overlap and will be applicable to both categories.
The non-superannuation property:
[7] See Norbis & Norbis (1986) FLC 91-712
Husband’s initial financial contributions:
It is common ground that at the commencement of the parties’ relationship in … 1999, the husband’s assets consisted of:
a)The Property A Property valued at approximately $260,000.00, subject to a mortgage of around $97,000.00;[8]
b)Motor Vehicle;
c)Personal effects;
d)$10,000.00 owed to husband by his sister Ms G.
[8] No objection was taken to those figures at trial.
However the husband also contends that at the commencement of the relationship, he held:
a)Savings in an ANZ Advantage Account in the sum of $181,000.00 which he says was derived from the sale of real estate;
b)$106,000.00 cash in a safe which he says was derived from the sale of properties and drawings from a prior business. (The “Business” money allegedly came from this source).
The wife disputes these matters.
$181,000 in the husband’s ANZ Access Account?
The husband’s evidence in this respect was straightforward at first blush.
Although he produced no contemporaneous bank statements to corroborate this bank balance, he had been able to produce (and annexe to his trial affidavit) a “Statement of Financial Position” that he had provided to the ANZ Bank on … 2000, around one (1) year after the relationship commenced. In that document, he did state that his relevant account balance was $181,000.00.
The husband adopted that figure as being retrospectively accurate to commencement of cohabitation in … 1999. His evidence was that the $181,000 was definitely in the account in 1999 because, being a mortgage offset account, he recalled that its balance was greater than the mortgage balance of $97,000.00 - so that there was no mortgage interest being charged.
This evidence was completely discredited in cross-examination.
The evidence revealed that on … 1999, the husband had in fact provided a “Statement of Financial Position” to the ANZ Bank in which he disclosed bank accounts of only $500.00. It is noteworthy that it was the wife, not the husband, who produced that particular document to the court.[9]
[9] Exhibit “W1”.
According to the “best” evidence, being the contemporaneous bank statements that the wife has put into evidence, the husband only had around $800.00 in the ANZ bank when the parties commenced cohabitation a few months earlier in … 1999.[10]
[10] See exhibits “W1” and “W2”.
Moreover, the husband’s ANZ Mortgage Statement – at least as at September/October 1999 – reveals that the Husband was in fact paying interest on the mortgage at that time.[11]
[11] See exhibit “W4”.
The husband did not have $181,000.00 in the bank at commencement of cohabitation.
$106,000 cash in a safe?
The husband claims that he had $106,000 in “cash” held in a safe at commencement of cohabitation.
In cross-examination, the husband explained that the moneys represented the sale proceeds of three (3) investment villas at Suburb H that he had owned prior to cohabitation. His evidence was that the mortgage over the three (3) villas was able to be discharged following the sale of the first two (2) villas, so that when the third villa was sold for $106,000 the husband received the entire sale proceeds which were then held as cash in the safe.
As with other aspects of his evidence, the husband’s version of events was superficially plausible.
In the witness box however, the husband had to concede that his trial affidavit was the first time he had ever asserted in these proceedings that he had held $106,000.00 cash in the safe.
I find it inconceivable that the husband would have “forgotten” the existence of such a significant asset when filing his earlier court material.
His “Statement of Financial Position” of … 1999 discloses bank accounts of $500.00 and makes no reference to any cash assets.[12]
[12] Exhibit “W1”
Moreover, if the husband did in fact have $106,000.00 in the safe as at that date, then there would have been no need for him to borrow the $100,000.00 from the ANZ Bank that he did in late 1999 to pay his ex-wife her property settlement.
When this proposition was put to the husband, he explained that he needed a bank cheque to pay out his ex-wife so that she would have “no comeback” against him. I do not accept that evidence. There were many ways that the $106,000.00 cash (if it existed) could have been paid/transferred to his ex-wife – instead the husband borrowed the full amount from the bank.
I have already rejected the husband’s evidence that he gave the wife $100,000.00 of that “cash” in 2005 and his false allegation cannot itself be used to prove the earlier existence of such a cash resource.
It is certainly possible that the husband had some cash monies in the safe as at cohabitation but given his patently unreliable evidence in so many respects I am unable to make a positive finding one way or the other. I cannot give him any “credit” in a contributions sense on account of this matter.
By way of summary, I find that the husband’s initial financial contributions were as follows:
a)The Property A Property valued at approximately $260,000.00, subject to a mortgage of around $97,000.00;[13]
b)Motor Vehicle;
c)Personal effects;
d)$10,000.00 owed to husband by his sister Ms G;
e)Around $800.00 in the ANZ Bank.
[13] No objection was taken to those figures at trial.
Notably, the husband also had a contingent liability to his ex-wife which was crystallised as a debt of $100,000.00 in late 1999. This significant debt was a glaring omission from his trial affidavit and another instance of where his evidence was misleading.[14]
[14] The husband’s payout of his ex-wife was not referred to at all in his trial affidavit.
Wife’s initial financial contributions:
At cohabitation, the wife owned a property at Property J which was subject to a mortgage. It is likely that the equity in such property was $20,000.00 or less.
She owned a motor vehicle.
She had some cash savings which she says were about $5,000.00, however that evidence is controversial and I do not accept it. The husband has produced the only contemporaneous bank statement which reveals that at that time the wife had a balance in her savings account which was slightly overdrawn.[15]
[15] See exhibit “H3”.
The Wife owned some furniture and effects.
Overall I find that the husband’s initial financial contributions were much greater than those of the wife.
Direct and indirect financial contributions made by or on behalf of the parties during the relationship:
By way of overview:
(a)the husband was in receipt of a disability support throughout the relationship, although he did undertake some work at the business at Suburb F between 2005 and 2007;
(b)the wife worked throughout the relationship as a customer service/manager. Her work varied between casual, part-time and permanent. She had some brief periods off work but was generally consistently employed throughout;
(c)I am satisfied from the contemporaneous records, and from the weight of the evidence, that the husband generally managed the bank accounts and finances of the parties during the relationship. The wife acquiesced, whether happily or otherwise;
(d)When the parties commenced their relationship, the husband had recently separated from his former wife and they had two (2) children together – Mr K aged 17 and Mr L aged 14. They were initially living with their mother in the Town M area and spending time with the husband. The husband provided financial support to Mr K and Mr L during the relationship. At different times Mr K and Mr L lived with the parties;
(e)The wife also brought a child into the relationship, Mr N, who was 4 or 5 years old when the parties commenced cohabitation. She lived with the parties until she turned 18 and spent time with her father. He paid the wife child support for Mr N.
Contributions in the early days of the relationship:
Initially the parties lived in the wife’s Property J home, which enabled the husband to rent out the Property A property.
In … 1999, the Husband borrowed $100,000.00 to pay out his ex-wife.[16] The husband did not mention this loan in his trial affidavit, despite having plenty of time to reflect on the past events and to inspect subpoenaed records. His trial affidavit deposes that his sister owed him $10,000.00 at commencement of separation – yet omits to mention the $100,000.00 he paid to his ex-wife in the months after the relationship commenced.
[16] See exhibit “W5”.
In early 2000 the Wife’s parents gave her a motor vehicle with personalised plates.
Around … 2000, the Husband refinanced the mortgage over the Property A property in the amount of $164,200.00.
The husband’s evidence was that this $164,200.00 loan was utilised for the parties’ purchase of a property at Suburb O. He explained that he had been able to pay out the Property A mortgage in … 2000 ($65,332.00) by way of applying his (then) cash savings. In support of this proposition, he annexed two (2) letters from the ANZ Bank of 26 September 2016 which reveal that the mortgage balance of $65,332.08 was extinguished between … 2001 and … 2000.
Superficially, the husband’s version of events was straightforward.
However, the letters from the ANZ Bank which the husband produced clearly have much less probative value than the contemporaneous bank records. Those records in fact clearly establish that the $164,200.00 loan comprised the refinancing of the then Property A mortgage balance ($65,093.00) together with the refinancing of the then loan balance in respect of the payout of the husband’s ex-wife ($98,738.00).[17]
[17] There was some $67.00 left over. See exhibits “W6, W7 and W8”.
Put shortly, the Property A mortgage had not been paid out from savings as the husband alleged; the mortgage was simply refinanced – the relevant loan account ending in “…”.
The husband’s inheritance in … 2000:
Within days of refinancing loan “…”, the husband received his inheritance from his late mother’s estate.
This is in fact the origin of the husband’s alleged $181,000.00 “initial contribution” which I have rejected as untrue. The $181,000.00 figure is directly traceable to the inheritance.
By way of explanation:
(a)on … 2000, there was a deposit into the husband’s ANZ account ending “…” in the amount of $177,795.55 bringing the account balance to around $181,000.00;
(b)the payment comprises two (2) components:
(i)a payment from the husband’s late mother’s estate of $82,447.26 being the husband’s share of the estate, together with reimbursement of some estate expenses he had incurred of $12,901.03 – totalling $95,348.29;
(ii)a separate amount of $82,447.26 – the source of which was highly contentious. The husband said that this amount came from his own cash resources and was deposited into his account on the same day. The wife denies this. She says that the $82,447.26 was the husband’s sister Ms G’s share of the estate and that the husband was, by agreement with his sister, effectively “hiding” her share of the estate in his account for Centrelink purposes. The husband’s evidence is that his sister’s share of the estate did happen to total exactly $82,447.26 but this is a mere coincidence;
(c)on … 2000, the husband completed the “Statement of Financial Circumstances” for the ANZ Bank which he annexes to his trial affidavit. In that document he represents to the ANZ Bank that the account balance of $181,000.00 is his;
(d)within days of completing that “Statement of Financial Position”, the husband had made three (3) separate withdrawals from the account totalling $72,447.26
I have no doubt whatsoever that the husband banked his sister’s $82,447.26 on that day. The husband however would not make that obvious concession despite being given the opportunity to do so in the witness box. Instead he clung to a fanciful and false version of events. He knew, or must reasonably have known, that his evidence in this regard was false.
I accept the wife’s affidavit evidence that at the time the husband banked the $177,795.55 he told the wife:
“I’m going to put Ms G’s money into my account so that it doesn’t flag for Centrelink. I will also get my $10,000.00 off her.”
I find that the husband did exactly what he told the wife he would do. He hid his sister’s money in his account; he recouped his $10,000.00 debt from her.
It follows from all of the above that the husband’s “Statement of Financial Circumstances” was plainly misleading as to the husband’s true financial position both at the time it was provided to the bank in 2000 and at the time it was annexed to his trial affidavit. The $181,000 balance was nothing but a transitory and inaccurate “snapshot” of the husband’s account at a very specific point in time, containing an artificially inflated figure which he knew included money that was not his.
In summary, I accept that the husband did bring in an inheritance of $95,348.29 in … 2000.
As a result, the husband had plenty of ready cash. He quickly depleted it however.
Wife sells Property J property; parties take out a joint loan for $184,500 to purchase Property P property:
The husband’s evidence was that in … 2000 the wife wanted to become a joint borrower with him; that the previous “investment” loan for $164,200.00 in the husband’s name ending “…” was jointly refinanced in the greater amount of $184,500.00 so that he and the wife could purchase a property at Property P.
But to recap, loan account “…” was no “investment” loan. It was a refinance of:
(a)the Property A mortgage – which, contrary to the husband’s evidence, had not been paid out;
(b)a refinance of a loan taken out by the husband to pay his ex-wife – a loan which the husband had omitted to refer to in his evidence.
In my view, the evidence clearly establishes that the $184,500.00 loan jointly taken out by the parties in … 2000 for the purchase of the Property P property was a separate and distinct loan from loan “…”. The joint loan account ended “…”.[18] The two (2) loan accounts “…” and “…” co-existed at the same time and were the subject of parallel loan account statements.
[18] See exhibit “W11”.
The husband was shown those loan statements and yet – incredibly in my view – he would not concede the (frankly unarguable) point.
On the evidence I am satisfied that in around … 2000, the wife sold her Property J property, receiving approximately $17,500.00 net. Those sale proceeds ended up being banked into the husband’s ANZ account ending “…” despite the Property J property having been in the wife’s name. The husband says that the wife owed him some $10,552.00 in reimbursement for various expenses he had incurred for the property but I do not accept his evidence. I am satisfied that the husband banked the wife’s money into his account - the wife acquiescing in this arrangement.
The $184,500.00 was utilised to purchase the Property P property. I accept the wife’s evidence that the purchase price was $203,000.00 of which she paid the $1,000.00 holding deposit, the husband paid the balance deposit of $19,500.00 plus stamp duty at $5,581.00. The remaining balance of $184,500.00 was taken out by way of joint loan.[19]
[19] See exhibit “W11”.
The husband’s sons lived with the parties for a period while they were at the Property P property.
Proceeds of sale of the Property P property:
The parties only held the Property P property until … 2001 when, because of some defects, they decided to sell it. I accept the wife’s evidence that the husband managed the sale process for the Property P property.
The bank statements reveal that the husband did not use the sale proceeds to discharge joint loan “…”. Rather, he used the sale proceeds to discharge loan “…” in the husband’s sole name. He kept the joint loan “…” ongoing. That said, I accept that the security for loan “…” was the husband’s Property A property.[20]
[20] See exhibits “W12” and “W13”.
I accept the wife’s evidence that, after the sale of the Property P property, the husband told her that the joint mortgage had been transferred over to the Property A property and that any modest net proceeds left over had been invested with ... Bank on their behalf. I accept the wife’s evidence that the husband in fact had her sign various Bank documents to authorise this investment.
The husband’s trial affidavit deposed that the whole of the leftover sale proceeds of the Property P property had in fact been placed into a joint account and were subsequently “jointly” drawn down by the parties.[21] However, the relevant subpoenaed bank record shows that the leftover balance of $57,425.66 from the Property P property was deposited by the husband into his ANZ account “…”.
[21] See husband’s trial affidavit paragraph 32
The husband did not invest the monies with … Bank as he falsely told the wife. He maintained control of those monies and his expenditure of them is unexplained.
What had happened with the inheritance moneys?
By the time the husband banked the $57,425.66 into account “…” in late 2001, his inheritance monies from … 2000 were all but gone.[22]
[22] The speed at which the Husband expended his late mother’s inheritance separately diminishes the force of the husband’s argument that he was able to retain $106,000.00 in the safe between 1998 and 2005 when he falsely alleged he had advanced $100,000.00 to the wife. Indeed, on the evidence before me, the husband has a clear capacity to go through money fairly quickly.
I accept the wife’s evidence that the husband had used inheritance moneys to purchase a motor vehicle around 2001; one of his sons had had a number of accidents in the vehicle; the husband had met the associated expenses out of his inheritance moneys.
What happened to the $57,425.66?
Within nine (9) months of depositing the $57,425.66 into his account “…”, the husband had spent those moneys too.
I am not satisfied on the evidence that the $57,425.66 which the husband had deliberately hidden from the wife should be treated as moneys that were “jointly” utilised as the husband would contend. I simply do not accept that the husband is a credible witness, his trial affidavit is plainly false and unreliable in multiple respects. He was actively misleading the wife about the whereabouts of these moneys at the relevant time and I find it more likely than not that the husband used these moneys largely for his own purposes and without reference to her.
2002 – 2004:
After selling the Property P property, the parties moved into the husband’s Property A home.
[X] was subsequently born in … 2002.
In … 2004, the parties borrowed a further $40,000.00. This money was deposited into the husband’s ANZ account “…”.[23]
[23] See exhibits “W16” and “W17”.
I accept the wife’s evidence that some $16,000.00 was used by the husband to acquire a new vehicle in his sole name. The husband traded in both his vehicles and the Wife’s motor vehicle.
The balance of the refinance ($24,000.00) was intended to be used to build a pool at the Property A property. However, the husband did not apply the money towards a pool. By … 2005 the monies had been depleted and there was only about $1,000.00 left in the “…” account.[24]
[24] See exhibit “W18”.
Business, Suburb F:
In the period 2005 to 2007, the Wife’s parents acquired a half share of the Business at Suburb F as referred to earlier.
During this two (2) year period, the parties were provided with accommodation and meals at the business. Moreover, the wife was paid a relatively generous income of $1,240.00 net per week ($1,500.00 gross) and I accept the evidence of the wife’s father that this was above the market rate at the time, noting his own significant experience in the industry.
As owner, the wife undertook fairly onerous obligations at the business. She was required to be present on site for some 90% of the time. She had to manage all aspects of the business and had significant legal responsibilities.
That said, I am satisfied that the husband did assist at the business more than the wife gives him credit for. In particular I am satisfied that the husband assisted with stocktakes; assisted with completing regulatory paperwork for the business, including with BAS statements.[25] The husband sometimes worked at the business cleaning and maintenance.
[25] The husband had previous business experience prior to his relationship to his Wife, having owned and managed a business.
One issue that was in dispute was the basis upon which the wife was paid. The wife’s case was that her gross income of $1,500.00 was hers alone whereas the husband’s case was that the income was split equally between them. In support of his contention, the husband produced a letter from the parties’ former accountants of 21 July 2005 addressed to both parties, which specified that “based on your advice and for no other reason”, it was proposed that the owners income of $1,500.00 gross per week from the business ($1,240.00 net) be split equally.
Interestingly, the husband’s trial affidavit did not actually assert that there was an agreement to split the income equally. The wife denies ever giving such advice to the accountants. She suggested that the document had been forged.
In one sense, an equal income split potentially made sense for tax purposes.[26]
[26] The wife’s father conceded that the income of $1,500.00 paid to the wife could be split between the parties in any way that they saw fit. This was understandable from his perspective.
But on a practical level, the wife’s role as owner of the business was vastly greater than the role taken on by the husband. The wife carried the legal obligations and liabilities as owner. She was the daughter of the half-owners; she had experience; she was employed on that basis. For his part the husband did however provide some practical assistance as set out earlier.
How the parties’ income was notionally split between them seems of little relevance. However, it is more relevant in the context of the superannuation property given that the wife was receiving the husband’s share of the superannuation into her own account. This will be addressed later.
Ironically, the full amount of the business income was in fact paid into the husband’s account – regardless of whatever notional manner in which the parties agreed to split it (if they did).
The only evidence as to how the income was supposed to be split between them was that set out in exhibit “H4”. But the husband is not a reliable witness, the wife vehemently denied the existence of any such arrangement, and there are no tax returns to prove either party’s case.
In the circumstances I am not able to make any positive finding about the issue.
I should add that while the parties were at the business, the wife’s parents sold the wife a vehicle at a discounted price. She repaid the purchase price by way of instalments but the parents forgave the last payment.
I would also add that I accept the wife’s evidence that the husband refused to rent out the Property A property during the two (2) years that the parties were living at the business. He refused to do so because one of his sons wanted to able to live there if necessary. This was something of a wasted opportunity as the property could have potentially earned an income over that two (2) years.
After sale of the business:
Following the business sale, the parties returned to live in the Property A property. The wife took a “time out” from work for a period so that she could spend more time with the children, before returning back to employment as a customer service officer.
In 2010, the wife’s parents sold the motor vehicle for a modest profit, applying the sale proceeds - plus a gift of $14,000.00 - to enable the wife to buy another vehicle.
In 2011 the wife reduced her work hours. The husband traded in his vehicle on another vehicle, purchased in his sole name. The husband paid the difference of some $21,000.00.
In 2012, the parties’ joint mortgage was extended by a further $36,000.00, which was paid into the husband’s ANZ account “…”. Approximately $18,000.00 of that money was gifted to the children of the parties and, in cross-examination the husband said that at least some of the balance of those moneys was paid on account of the “… Programme” in which he had by then become involved.[27]
[27] This was a loyalty shopping business connected to Company D.
Lead-up to separation:
Around mid-2014 the husband stopped contributing to the joint mortgage repayments. He was saving his pension money to build the pool that the parties had borrowed for back in 2004.
The wife took over the mortgage repayments.
In 2014, the Wife’s parents sold her their vehicle, giving her the proceeds and gifting her another $10,000.00 to buy another motor vehicle.
At separation in May/June 2016 the wife moved out of the home. The husband’s non-contribution toward the mortgage repayments from mid 2014 onwards meant that, in a sense, he made a “windfall gain” in that he was able to retain those monies for his own purposes.
Before turning to the post-separation contributions, I wish to deal with two (2) other aspects of the evidence.
Gambling:
In the wife’s material she deposed that the husband had engaged in waste, gambling money on the pokies, at betting agencies and on the iPads. At trial, her counsel formally abandoned the wife’s waste allegation in that respect.
The Wife was nonetheless cross-examined about the gambling allegation, explaining that she said she had given relevant corroborating documents to her solicitor. Notably, such documents have never been produced by her despite being called for.
Both parties agree that the husband gambled during the relationship, and I am comfortably satisfied that the husband gambled more often than the wife did. However, while the husband has not satisfactorily accounted for his expenditure of moneys, I am not satisfied that he “wasted” moneys through gambling.[28]
[28] Kowaliw & Kowaliw (1981) FLC 91-092
I do not consider that the wife was being dishonest about the husband’s gambling. She was correct about him gambling regularly and in my view she genuinely believes that he wasted money.
Wife’s alleged re-draws?
The husband in his case tried to suggest that the wife had withdrawn $200,000.00 from his various bank accounts over the years - indeed he sought a declaration to that affect.
There is no evidentiary basis for that position whatsoever. It was a total ambit position, perhaps designed to deal with the fact that so much of the husband’s money over the years was gone and unaccounted for.
Homemaking and parenting contributions during the relationship:
The husband was a disability support pensioner at all material times and I accept the wife’s evidence that he complained of a bad back.
The wife undertook the bulk of the domestic work, including cooking, cleaning and laundry. I accept the wife’s evidence that Mr N - and later [X] - assisted her with these tasks.
The husband assisted with the parenting of Mr N prior to [X]’s birth. After [X] was born he also assisted in her care.
As a general statement, the wife cared for the children whenever she was at home and available, and the husband cared for the children when the wife was at work.
During 2005 - 2007 the wife was working for six (6) days per week at the business – she worked long hours. Nonetheless her evidence was telling in relation to the childcare arrangements during that busy period. In particular, I accept the wife’s evidence that during this period she arranged for Mr N to catch the bus to and from school. Further, she would drop [X] to pre-school five (5) days per week prior to opening the business. When Mr N got back from school, the wife would then take Mr N with her to collect [X] later in the afternoon.
Between 2008 and 2011 I note that the wife was working full-time while [X] was at Kindergarten. From 2011 onwards the wife worked part-time and, as stated, the husband cared for [X] whilst the wife was at work.
Overall, I find that the wife actively involved herself in the children’s lives to the maximum extent possible; the husband was less inclined to do so although he certainly made significant contributions as a parent in respect of both Mr N and [X].
The wife also made parenting contributions in relation to the husband’s children Mr K and Mr L, although her contributions were relatively modest.
Overall assessment of contributions as at separation:
This was a long relationship. Each party contributed income and each made significant contributions.
Notwithstanding the level of particularity to which I have had to descend in order to resolve various disputes as to the financial history, I again emphasise that I intend to adopt a “broad brush” approach to assessment of contributions.
The husband’s initial contributions were markedly superior to those of the wife; moreover his late mother contributed an inheritance in early 2000.
The husband did however have to pay out his ex-wife early on in the relationship – which greatly diminishes the significance of his initial contribution.
Further, the husband went through fairly substantial amounts of money during the relationship without any real explanation. I do not consider that his expenditure can simply be treated as having been reasonably incurred for the joint benefit of the parties. Some if it no doubt was reasonably spent for their joint benefit, but I am not satisfied that it all was. Indeed, at times the husband was positively dishonest with the wife about money matters. He did not want her to know what he was spending money on.
The husband attempted at trial to reconstruct the past financial history in a manner most favourable to his case, and adverse to the wife’s case. Those attempts fell flat when the evidence emerged.
I am satisfied that the wife’s family provided her with various financial assistance and support in the form of motor vehicles and gifts, including employing her as owner at the business which provided the parties with free accommodation and meals and a generous income.
Notably, the husband declined to rent out his Property A property during the two (2) year period that the parties were at the business.
Both parties made homemaking and parenting contributions throughout. The husband made parenting contributions in respect of Mr N, treating her as his own child.[29] The wife made parenting contributions, albeit much more modest, in respect of Mr K and Mr L.[30]
[29] See Robb v Robb (1995) FLC 92-555.
[30] Ibid.
The Wife’s homemaking contributions were much superior overall.
The respective parenting contributions probably favour the husband overall having particular regard to the wife’s work commitments during the relationship and to the husband’s parenting of Mr N from a young age.
Without wanting to overly repeat my earlier reasons, I consider that in all of the circumstances the respective contributions of the parties in respect of the non-superannuation property as at separation were 55% to the husband and 45% to the wife.[31] The weighting ultimately favours the husband largely by reason of his superior initial contribution.[32]
[31] I am mindful of the fact that, at the end of the 17 year relationship, it is not so much a question of “erosion” of the Husband’s initial contribution as matter of weighing up what weight ought to be given to that contribution given a myriad of other contributions throughout the relationship. See Pierce v Pierce (1999) FLC 92-844.
[32] Pierce & Pierce (1999) FLC 92-844
Post-separation contributions:
Post separation, the husband transferred $63,000.00 from the joint home loan savings account to pay out the home loan mortgage.
I am satisfied on balance that such monies were accumulated in the account during the relationship of the parties. I reject the husband’s evidence that $63,000.00 came from monies held by him before the relationship.
Since separation, the husband has had sole occupation of the Property A home. In effect he has had very cheap “rent” there. The only mortgage he has taken out over the property has been in respect of his own legal fees.
In respect of [X], the husband has paid the statutory minimum child support payments to the wife commensurate with his status as a disability support pensioner.
The wife’s unchallenged evidence is that [X]’s day-to day living costs are $150.00 per week as set out in her Financial Statement. The husband pays $4.00 per week in child support. If the parties were notionally sharing her living expenses equally then the husband would have paid the wife an additional $71.00 per week for the past 2 ¾ years.
Significantly, the Wife has been making practically all of the parenting contributions for [X] since separation. [X] has not spent time with the husband now for quite a long time.
Having noted these matters, the wife did sell her motor vehicle for $13,990.00 and I accept her evidence that this money was applied towards legal expenses. I am not “adding back” the value of that vehicle into the Balance Sheet[33] but I nonetheless take that asset disposal into account.
[33] The husband did not contend that I should
The husband transferred $24,770.00 out of the Company D bank account which he says – and the wife accepts – was used to pay creditors. He did not obtain any benefit from that withdrawal but it was this withdrawal that the wife says prompted her to make her own withdrawals.
In that regard the wife withdrew approximately $7,000.00 out of the accounts of Company D. I accept her evidence that at least some of this money was used to pay debts of the company. Nonetheless there was some modest personal use of those moneys.
Overall, I am of the view that there ought to be an adjustment in the wife’s favour for post-separation contributions, primarily by reason of the wife’s superior parenting contributions for [X] and the husband’s low living costs at the Property A property, an asset to which the wife has made a real contribution but which the husband has had the practical benefit of since separation.
Overall assessment of contributions to the non-superannuation property:
On the basis of the above, I find contributions to be 50% each.
Contributions to the Superannuation Property:
I refer to my earlier findings herein.
I do not know how much superannuation each party brought into the relationship.
The husband was a disability support pensioner when he met the wife. There is no evidence that he received employer superannuation contributions during the relationship. He did not receive superannuation for his work at the business.
After separation, the husband completely withdrew his then superannuation balance of $6,721.00 to pay legal fees. Logically, the husband’s superannuation at separation must be directly traceable to the super he brought into the relationship in 1999.
I have already noted that the wife worked throughout most of the relationship.
There is no doubt that the wife’s capacity to work, and thus to accumulate superannuation, was assisted by the husband’s contributions as a parent.
During 2005 – 2007, when the husband worked at the business, his “share” of the superannuation was paid to the wife. That said, her employment role at the business was far more significant than that of the husband.
In written submissions, the wife’s counsel suggested that the husband’s salary at the business would have notionally been around $240.00 of the $1,500.00 total salary per week. On that basis, the wife submits that the husband’s 9% employer super contribution over that two (2) year period amounts to just $2,250.00.
There is some attractiveness to the wife’s approach. It would fairly reflect what I would consider to be the parties’ respective “entitlements” for their work at the business. However, it ignores the holistic reality that the wife to some extent depended upon the husband to assist in the care of [X] (and Mr N) during this period. It is not a matter of strictly quantifying what the notional super payments to the husband should have been.
The husband contends that there should be an equal super split in respect of the superannuation accumulated during the relationship. In my view, such an approach is somewhat too generous to the husband.
My difficulty however is that I do not know the wife’s super balance at commencement of cohabitation – or at separation.
At commencement of cohabitation the wife was 28 years old, working as a customer service officer with a small child to care for (Mr N). I infer that her super balance would have been modest.
As at trial, two years post-separation, the wife’s super balance had grown to $109,329.00. But this figure included two (2) years’ worth of employer contributions since separation for which the husband ought receive no “credit” in circumstances where the husband’s parenting role for [X] has varied from minimal to non-existent.
The wife’s post-separation super balance in her Super Fund 3 account had in recent times increased from $23,762.00 to $34,470.00.
In the end, doing the best I can in what is inevitably an imprecise exercise, I consider that an appropriate contributions based assessment to the wife’s current superannuation balance would be 65% - 35% in the wife’s favour. This creates a base entitlement to the husband of $38,265.00.
My proposed division accounts for whatever modest super (and growth thereon) that the wife would have brought into the relationship; it accounts for the wife’s post-separation employer contributions; it accounts for the parties’ contributions during the relationship.
At trial it was common ground that any superannuation split should be made from the wife’s Super Fund 2 account. Procedural fairness has been afforded to the fund.[34] If the husband can roll out this entitlement into a new complying fund of his own, then he may potentially be able to access those funds in the short term given he is 57 years of age.
Step 4 – Identifying and assessing the relevant factors pursuant to s.90SF(3), s.90SM(4)(d), s.90SM(4)(f) & s.90SM(4)(g):
[34] Exhibit “W22”
There is some overlap between these statutory considerations and I will deal with them collectively.
The husband is a 57 year old disability support pensioner. He receives a pension of $445.00 per week and he spends $371.00 per week. His health is compromised and by definition he must have no relevantly serious capacity to work.
The wife is 47 year old and works as a permanent part-time customer service officer. She suffers major depression. Her income is also modest in that she earns $585.00 per week, supplemented by $75.00 per week in Family Tax Benefit and $4.00 per week child support. From her $664.00 per week income, she pays expenses of $510.00 per week.
Ignoring cents, on a contributions basis each party has a present entitlement to non-superannuation assets of $245,628.00. In relation to superannuation the wife’s contributions-based entitlement is $71,063.00 to the husband’s $38,266.00.
On any view these are modest assets.
The wife has a capacity for gainful employment while the husband does not.
The wife has the ongoing full-time care of [X], receiving just $4.00 per week child support. While it is true that this is the statutory rate, and that the wife has never sought a departure order, it is undeniable that the wife is bearing a grossly disproportionate share of [X]’s living expenses going forward.
The wife is making all of the relevant parenting contributions for [X], with some assistance from her parents.
Each party can adequately support themselves – although it is somewhat marginal for both.
In the husband’s case he presently has the benefit of very “cheap” accommodation at the Property A home. But a sale of that property appears unavoidable and the husband may well have no option but to find a rental property.
The wife has had the financial and practical assistance of her family to subsidise her living costs. They are presently providing her with free rent in a property they own. In her Financial Statement, the Wife indicated that she did not pay rent and she did not pay utilities. When pressed in the witness box and at a time when she was somewhat distressed about revealing her location, she in fact said that she did pay utilities. This evidence was wrong.
I accept the wife’s father’s evidence that he pays such expenses for her.
I accept that the wife’s family will likely continue to provide her with some ongoing financial support if they consider that she needs it. It goes against the grain for them to do so, as the wife’s parents are “self-made” with a strong work ethic. They would much prefer that the wife be financially independent – as would the wife. At age 47 the wife has found herself financially beholden to, and subsidised by, her parents.
The wife gave evidence that she has borrowed her legal fees from her parents and that she currently owes them $30,000.00. She did not contend that this debt be included in the Balance Sheet; there is no formal loan agreement in place and I accept the submission made by the husband’s counsel that the presumption of advancement would apply.
Nonetheless I am satisfied that the wife will make such repayments to her parents as she can afford.
This is a case in which, put simply, there is not enough money to “go around”. I cannot craft an order that would enable both parties to have the standard of living that each might consider “reasonable”. I can only do the best I can with the assets as I have found them to be.
Neither party can realistically afford to own a home although the wife’s capacity to borrow is likely to be greater than the husband’s given her younger age and her employment status. Her parents may also potentially assist her but they are not obliged to do so.
[X] has turned sixteen (16) and will be an adult in a couple of years. She is a gifted student and her educational needs will likely be a priority in the next couple of years.
The orders I am contemplating will not affect the earning capacity of either party.
When considering an adjustment as part of the 4th step, the court has to look at the real value of the adjustment. The assets here are modest.
If either party had greater assets, there would potentially be room for an adjustment in the other party’s favour. But in my view it would be unjust to either:
(a)award to the wife any extra share of the husband’s limited property on account of the factors favouring her; or
(b)award the husband any extra share of the wife’s limited property on account of the factors favouring him.
Step 5 – Considering whether my proposed orders are “just and equitable”:
I consider that it would be just and equitable to divide the non-superannuation assets of the parties on a 50%-50% basis and the superannuation assets on a 65% - 35% basis in favour of the wife.
In closing, there are a few “loose ends” to which I will now turn.
Orders sought by the parties concerning the proprietary companies:
The parties proposed different orders in relation to Company B, Company C and Company D.
The wife seeks an order that, in the event the Australian Taxation Office or ASIC issue either party with any notice or demand properly payable in relation to the companies, then the parties are to equally share the amount of the notice or demand.
The husband, who has since resigned as a director of the companies, was originally seeking to transfer the relevant shareholdings to the wife, in return for an indemnity in relation to any company liabilities. In his closing written submissions the husband’s position was simply that no orders be made in relation to the companies. His takes the formal position that any future company liabilities are exactly that; they are not the liabilities of the parties.
I prefer the wife’s evidence to that of the husband in relation to the past operation of the companies. I accept that the husband was the major driving force behind them and that, after separation, he resigned his directorships with the intention of leaving any potential liabilities in the wife’s hands. I accept that the husband knows much more about the company operations than the wife does.
Section 81 of the Act imposes a duty upon the court to, as far as practicable, make orders which will finally determine the financial relationships between the parties and avoid further proceedings between them.
Having regard to section 81, to my earlier findings as to contributions, to the fact that the companies were joint enterprises (albeit that the husband was the driving force behind them), I consider that it would be just and equitable to make the order sought by the wife, albeit that my order will be drafted so as to ensure that it only relates to notices or demands for which the parties are personally liable.
Chattels and personal property claimed by the wife:
The husband retained the chattels in the Property A home when the wife and [X] moved out at separation.
The wife’s trial affidavit evidence deposes that the chattels included specific property which is of sentimental value to her and to [X] but of no real monetary value. She had set out in her original Response those items she sought returned.
The husband’s trial affidavit was filed the same day as the wife’s; in that sense it was not strictly “responsive” to hers. His affidavit was silent about the chattels. Moreover, when the husband entered the witness box he did not seek leave to adduce oral evidence-in-chief on the issue.
Thus the wife’s evidence was not the subject of any contrary evidence from the husband.
At trial, the wife’s counsel chose not to cross-examine the husband about the chattels. I do not however take that as a formal abandonment of the issue.[35]
[35] In contrast the wife’s argument as to “waste” related to the husband’s gambling was formally abandoned at trial.
Likewise, the husband’s counsel chose not to ask any questions of the wife about the chattels.
Unsurprisingly given the level of conflict and acrimony between these parties, each takes a complete different view as to what I should do about the chattels. The wife’s position is that, as the wife was not cross-examined, the court should accept her evidence, particularly as it was the only evidence before me.
In reply the husband submits that he does not say the wife would not be entitled to her possessions that may still be at the home. However – and this is the catch – It is disputed that there are any further belongings of the respondent wife remaining at the former matrimonial home and it is not correct to say the evidence was unchallenged.
I disagree. The wife’s evidence was unchallenged by any evidence from the husband.
The suggestion that there is in fact no property of the wife’s still in the former home is not evidence – it is a mere submission. I will not permit the husband to treat it as evidence.
The husband submits that the wife abandoned her claim by not asking questions of the husband. I disagree. Each party clearly made a forensic decision not to cross-examine on topic at trial. The wife arguably had the luxury of making that choice with the benefit of having provided the only relevant evidence.
That said, I am not strictly going to determine this issue by reference to the so-called rule in Browne & Dunn[36] but rather by reference to what would be just and equitable given the breakdown of the parties’ relationship. I do so against the backdrop that I have found that the wife was a witness of much greater credit than the husband and I accept her evidence as to these chattel items. I accept her evidence that the relevant items are in fact in the husband’s possession.
[36] (1893) 6R 67.
In the circumstances I propose to order the return of some – but not all – of the chattels the wife seeks. In particular I am limiting my order to the return of those items which I would consider to be of particular personal or sentimental to the wife or to [X] and which in my view it would be just and equitable to return to the wife given the breakdown of their failed endeavour/relationship. It would be unconscionable for the husband to retain the chattel items the subject of my orders.
I have concerns that my order as to the chattels may be difficult to enforce. I do not want to put the parties through the anguish of further litigation in relation to the chattels and I am mindful of section 81. However, with a modicum of goodwill – largely absent to date – there is no sound reason why my order should not be able to be effected. Enforcement proceedings would be regrettable.
Conclusion:
This was in every respect a bitter and unfortunate trial.
I consider that my proposed orders are just and equitable.
While the husband sought to be able to retain the Property A home, this was on the basis of a much more generous division in his favour of 70/30. I add that his proposed division included the wife retaining as part of her 30% the fictional $100,000.00 cash payment he made her.
If the husband can in fact pay out the wife a sum equivalent to her entitlement pursuant to my orders, then there is nothing to stop him from approaching her solicitors with such proposal. But absent any evidence that he can do so I will be ordering the sale of the Property A property to proceed expeditiously. Only the wife gave me a proposed set of orders in that regard and I have largely adopted those.
To limit the risk of further litigation and avoid confusion, I will additionally include orders that the husband cooperate with the real estate agent and that pending sale he continue to meet the modest mortgage repayments, rates and the utilities expenses as he has been doing and which is within his means.
I certify that the preceding two hundred and eighty (280) paragraphs are a true copy of the reasons for judgment of Judge Betts
Date: 21 February 2019
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