MATLEY & MATLEY
[2020] FCCA 571
•13 March 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MATLEY & MATLEY | [2020] FCCA 571 |
| Catchwords: FAMILY LAW – Property – Where there are two young children of the relationship – where the relationship was for a total of approximately 3 years - how the contributions to the construction and purchase of the A Street, Town B property should be determined - what should be included in the asset pool - what adjustment, if any, is just and equitable. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79, 81 |
| Cases cited: Kouper & Kouper (No.3) [2009] FamCA 1080 |
| Applicant: | MR MATLEY |
| Respondent: | MS MATLEY |
| File Number: | BRC 11727 of 2017 |
| Judgment of: | Judge Middleton |
| Hearing dates: | 27 & 28 August 2019 and 24 February 2020 |
| Date of Last Submission: | 24 February 2020 |
| Delivered at: | Brisbane |
| Delivered on: | 13 March 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms McDiarmid |
| Solicitors for the Applicant: | Mary Valley Law |
| Counsel for the Respondent: | Mr Hanlon |
ORDERS
That within 60 days of the date of these orders, the wife pay to the husband the sum of $44,407.80.
That the wife will indemnify and keep indemnified the husband in relation to the mortgage number … held with the National Australia Bank.
Contemporaneous with the payment referred to in these orders the husband will do all things and pay all fees necessary to withdraw the caveat lodged on the title over the property situated at A Street, Town B in the State of Queensland and more particularly described as Lot …RP … title reference … (the A Street, Town B property).
Contemporaneous with the payment referred to in these orders, the husband will do all things reasonably necessary to transfer all his right, title and interest in the A Street, Town B property.
In the event the wife cannot make payment to the husband in accordance with these orders then on the expiration of 60 days from the date of the orders, the following shall apply:
(a)within a further 60 days the husband pay to the wife the sum of $177,429.20.
(b)contemporaneous with the payment referred to in order (a) above the husband will refinance the existing mortgage so as to discharge mortgage number … and to secure a mortgage in his own name over A Street, Town B property and thereafter indemnify and keep indemnified the wife in relation to the subsequent mortgage.
(c)contemporaneous with the refinancing and payment referred to in orders (a) and (b) the wife will do all things and sign all documents necessary to transfer all her right, title and interest in the A Street, Town B property.
in the event neither party can satisfy the payment and/or refinance referred to in these orders within the timeframe referred to within these orders, then the A Street, Town B property be sold and the following terms apply;
(a)That the husband and wife shall forthwith do all such acts and things and sign all such documents as may be required to effect a sale of the home situate at and known as A Street, Town B, in the State of Queensland more particularly described as Lot … title reference … ("the home").
(b)By way of consequential arrangement for the purposes of effecting a sale:-
(i)The home shall be listed for sale with a registered real estate agent as agreed to by the parties and failing agreement as shall be nominated by the Chief Executive Officer of the Real Estate Institute of Queensland.
(ii)The listing price for the home shall be as agreed between the parties and failing agreement as nominated by a valuer appointed by the real estate agent.
In the event that the home has not been sold by or before a date six (6) months from the date of the making of this Order then the husband and the wife shall reduce the list price by the sum of $5,000.00 and by a further sum of $5,000.00 per month thereafter until the list price is reduced by $20,000.00.
In the event that the home has not been sold by or before a date two (2) months from the date of the reduction of the list price by $20,000.00, then the husband and the wife shall make all such arrangements and do all such acts and sign all such documents to procure a sale by public auction of the home upon the following terms:-
(a)The auctioneer shall be as agreed between the parties and failing agreement as shall be nominated by the registered real estate agents nominated by the Chief Executive Officer of the Real Estate Institute of Queensland.
(b)The parties will pay to the auctioneer any sums requested for advertising expenses in relation to the auction.
(c)The parties will execute all documents requested by the auctioneer for the sale of the home by auction.
(d)The parties will request the auctioneer to recommend a reserve price to be placed on the home for the purpose of the auction sale and the husband and wife will accept such recommended reserved price.
(e)The parties will give such instructions as are necessary to a solicitor for the preparation of a contract for sale and for the contract of sale to be made available to the auctioneer prior to the auction.
(f)The parties will attend at the auction sale of the home and negotiate with the highest bidder in the event that the reserved price is not reached. The parties agree to accept the advice of the auctioneer as to the acceptance of a price less than the reserved price.
(g)The parties will execute the contract of sale.
(h)The parties will co-operate in any way with the auctioneer in relation to the auction of the home including making a key available, allow an inspection of the home at all times requested by the auctioneer and ensuring that the home is in a neat and clean condition at the time of inspection by prospective purchasers.
(i)The parties will execute all other documents necessary to complete the sale.
The husband will retain, to the exclusion of the wife the following entities:
(a)C Pty Ltd;
(b)D Pty Ltd;
(c)The Matley Family Trust;
The husband will indemnify and keep indemnified, the wife with respect to any liabilities arising in relation to the above mentioned entities listed in order 9.
That the husband will indemnify and keep indemnified the wife with respect to any liabilities to the husband’s parents including relating to the Rocket loan held with Westpac account number …74.
Superannuation Split
That in accordance with section 90XT(1)(a) of the Family Law Act 1975 (the act) whenever splittable payment within the meaning of section 90XE becomes payable to or on behalf of the wife Ms Matley member number …63, from her interests in the Super Fund E, the husband, Mr Matley is entitled to be paid (by the trustee) the amount calculated in accordance with part VI of the Family Law Superannuation Regulations 2001 using a base amount of $25,000 and there is a corresponding reduction in the entitlement that the wife would have but for these orders.
The operative time for order 12 is 4 business days after service of the final orders on Super Fund E.
This order binds the trustee of Super Fund E.
Other property and liabilities
Other than as otherwise set out in these orders, the parties have the sole right, title and interest in any other property which is at the date of these orders in their possession, title or name and they shall be solely liable for and indemnify the other against any personal liabilities, and in particular;
(a)the wife will retain the furniture and chattels, funds standing to her credit with any financial institution and her superannuation, subject to the superannuation split above;
(b)the husband will retain the entities set out in order 9, his furniture and chattels, funds standing to his credit with any financial institution and his superannuation.
That orders 12 to 14 are stayed until the Court is satisfied that procedural fairness has been afforded to Super Fund E.
That the Court will be satisfied procedural fairness has been afforded upon the filing of an affidavit in chambers annexing a copy of the letter sent to Super Fund E together with any letter from Super Fund E in reply.
IT IS NOTED that publication of this judgment under the pseudonym Matley & Matley is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 11727 of 2017
| MR MATLEY |
Applicant
And
| MS MATLEY |
Respondent
REASONS FOR JUDGMENT
Background
This is an application brought by the applicant husband for property adjustment orders as a result of the parties’ ongoing dispute.
The parties commenced cohabitation in 2014, were married in 2016 and separated on 4 August 2017. A relationship of some three years.
The parties have two children, X born in 2015, aged four and Y born in 2017 aged two years and six months.
The parties entered into consent orders in relation to the arrangements for their children on 12 August 2019. The orders provide for the children to primarily live with the wife and spend three nights per fortnight with the husband. The parties have agreed to review those orders in April 2021.
During the relationship the parties acquired a property at A Street, Town B (the A Street, Town B property). The property was purchased in the name of the wife.
Prior to cohabitation the husband owned and operated a business consisting of two companies C Pty Ltd and D Pty Ltd.
Prior to cohabitation the wife was renting property, and had some cash available to her.
The parties are in dispute as to who made the major contributions towards the acquisition of the A Street, Town B property. The parties are also in disagreement as to the initial contributions made by the husband.
It is asserted by the paternal family that the purchase price for the A Street, Town B property was reduced by the sum of $75,000 due to the value of an improvement on the paternal grandparent’s property. The wife disputes that there was any agreement to reduce the purchase price and says that the purchase price was in accordance with the current value of the land.
The parties are also in dispute as to whether the paternal grandfather did the majority of the building works on the A Street, Town B property and whether the maternal grandfather did some substantial work to the A Street, Town B property.
Issues
The issues to be determined are as follows;
a)how should the contributions to the construction and purchase of the A Street, Town B property be determined;
b)what should be included in the asset pool;
c)what adjustment, if any, is just and equitable.
The Material
The husband relied upon the material as set out in his case outline filed on 20 August 2019.
The wife relied upon the material as set out in her case outline filed on 20 August 2019.
The orders sought
The husband sought orders in accordance with his case outline filed on the 28 August 2019 and specifically as follows;
a)That within sixty (60) days the respondent transfer to the applicant all of her right title and interest in and to the real property and improvements situated at A Street, Town B.
b)That contemporaneously with the transfer to the applicant of the real property and improvements referred to in order 1 hereof the applicant takes such steps as are necessary to refinance the existing mortgage liability so as to discharge the respondents liability for payment of that debt and further the applicant pay to the respondent the sum of $110,000.00.
c)That pending the transfer referred to in order 1 hereof;
i)The respondent shall have the sole right to occupy the property and during such right of occupation the respondent shall be responsible for all mortgage payments, rates and outgoings of the property as they fall due up to and including the date of transfer;
ii)The parties hold their respective interest in the property upon trust pursuant to these orders;
iii)Neither party shall encumber the property without the consent in writing of the other party or any mortgagee;
iv)The respondent shall maintain the property in a state of good repair and cause to be repaired any damage to the property cause by her.
d)That upon transfer the respondent shall vacate the property referred to in order 1 hereof and provide the applicant with vacant possession and the applicant shall have the sole right to occupy the property.
e)That the applicant retain the business operated by C Pty Ltd as Trustee for the Matley Trust trading as C Pty Ltd and D Pty Ltd together with all of the assets, plant and equipment of the said business and the applicant remain solely liable for and indemnify the respondent in respect of any and all liabilities of the said business.
f)That the applicant remain solely liable for and indemnify the respondent in respect of the debts outstanding to the applicants parents.
g)That unless otherwise specified in these orders except for the purposes of enforcing payment of any money due under these or any subsequent orders;
i)Each party shall be solely entitled to the exclusion of the other to all property in the possession of such party as at this dates; and
ii)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to this order.
h)That the parties execute every deed and instrument necessary to give effect to the terms of these orders within fourteen (14) days of a request to do so by the other party. Should any party refuse or neglect to execute such deed or instrument within that time a Registrar of the Federal Circuit Court is hereby appointed for the purpose of section 106A of the Family Law Act to execute such deed or instrument on behalf of the defaulting party.
i)If either of the applicant or respondent are as a consequence of a breach of these orders to make an application for enforcement or pursuant to sanction 106A of the Family Law Act to the Federal Circuit Court or the Family Law Courts of Australia then they will be at liberty to make an application for an order for the costs that they have incurred in relation to that application for the works required for such enforcement or implementation.
The wife sought orders as set out in her case outline filed 28 August 2019 and specifically as follows;
a)That the wife will retain her property at A Street, Town B in the state of Queensland and more particularly described as Lot … title reference … (the Town B property).
b)That the respondent within 30 days of the date of these orders pay to the applicant the sum of $25,000.
c)That the respondent will indemnify and keep indemnified the applicant in relation to the mortgage number … held with the National Australia Bank.
d)That the contemporaneously with the payment in order 2, the husband will do all things and pay all fees necessary to withdraw the caveat lodged on title over the Town B property.
e)That the husband will retain to the exclusion of the wife the following entities;
i)C Pty Ltd;
ii)D Pty Ltd;
iii)The Matley Family Trust.
f)That the husband will indemnify, and keep indemnified, the respondent with respect any liabilities to his parents including relating to the Rocket Loan held with Westpac account number …74.
g)That in accordance with section 90XT(1)(a) of the Family Law Act 1975 (the Act) whenever a splittable payment within the meaning of section 90XE of the Act becomes payable to or on behalf of the respondent, Ms Matley Member Number: …63 from her interest in the Super Fund E, the applicant, Mr Matley is entitled to be paid (by the trustee) the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using a base amount of $25,000 and there is a corresponding reduction in the entitlement that the respondent would have had but for these orders.
h)The operative time for order 8 is four business days after the service of the final orders on Super Fund E.
i)This order binds the trustee of the Super Fund E.
j)That other than as otherwise set out in this agreement, the parties have the sole right, title and interest in any other property which is at the date of these orders in their possession, title or name and they shall be solely liable for and indemnify the other against any personal liabilities and in particular;
i)The wife will retain the property at A Street, Town B, her furniture and chattels, funds standing to her credit with any financial institution and her superannuation, subject to the super split above.
ii)The husband will retain the entities set out in order 5, his furniture and chattels, funds standing to his credit with any financial institution and his superannuation.
Notations:
k)The parties note that this order and payments made as a result, will be affected by the Superannuation Legislation Amendment (Family Law) Act 2004 which came into effect on 18 May 2004 and the Family Law (Superannuation) Regulations 2001 which together provided a separate superannuation interest to be created for the non-member spouse and for consequential effects on payments.
l)That the parties agree that as far as it is practicable to do so that the orders are made having regard to the provisions of section 81 of the Act with a view to determining for all time the financial relationship between the parties and avoiding further proceedings between them.
The Law
Section 79 of the Family Law Act 1975 (the act) enables the court to exercise jurisdiction under the act to order interest in property as between the parties to a marriage or de facto relationship. There is a broad discretion pursuant to section 79.
However the discretion cannot be exercised unless it is just and equitable to alter the legal and equitable interest of the parties (section 79(2), and Stanford v Stanford (2012) FLC 93-518).
Furthermore any order made must be appropriate (Section 79(1)). The order must also finalise the relationship between the parties as far as practicable (section 81 of the act).
The plurality in Stanford held at paragraph 37:
“First, it is necessary to begin consideration of whether it is just an equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interest of the parties in the property. So much follows from the text of section 79(1)(a) itself, which refers to “altering the interests of the parties to the marriage in the property” (emphasis added). The question posed by section 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.”
Once that consideration has been made and a determination as to what property, if any, there is to alter then there is a well-established four step process to follow before exercising the discretion as set out in AJO & GRO (2005) FLC 93-218 at par 46:
“the four important steps to be taken in determining a property dispute are well-defined (see for example Ferraro & Ferraro (1993) FLC 92-335 at 79, 560) and they are:
a. to identify and value the net property of the parties (usually as at the date of trial);
b. to consider the contributions of the parties within paragraphs (a)-(c) of section 79(4);
c. to consider the section 75(2) factors; and
d. to consider whether the order proposed is just and equitable.”
Identification of the existing legal and equitable interests of the parties
The table below sets out each party’s assertion is to the property interests of the parties.
Assets Ownership Applicant Value Respondent Value Real property A Street, Town B Respondent $625,000 $625,000 Motor Vehicle 1 Respondent’s possession $8000 Nil Furniture Joint $10,000 Nil Boat Applicant $6000 $6000 Plant and Equipment C Pty Ltd (Applicant) $576,465 Nil Sub total $1,225,000 $631,000 Add backs Tractor Respondent $10,000 Nil (livestock) Respondent $7850 Nil Sub total $17,850 Total assets $1,242,850 $631,000 Liabilities Mortgage on A Street, Town B Respondent $403,000 $403,100 Rocket Loan Applicant $59,861 Nil Loans to Applicants parents Applicant $26,820 Nil Loans encumbering plant and equipment C Pty Ltd (Applicant) $765,030 Nil Total Liabilities $1,254,711 $403,100 Total non-super assets -$27,711 $227,900 Superannuation Super Fund F Applicant $28,628 $26,502 Super Fund E Respondent $76,468 $76,468 Total super pool $105,096 $102,970 Total Net Pool
Including super$75,385 $330,870
What is immediately identifiable is that the wife asserts that the value of the plant and equipment and the liabilities associated with the plant and equipment should not be included in the property pool.
It was submitted on behalf of the wife that due to the very short nature of the relationship the preferred approach when considering the assets of the parties would be to consider the assets on a two pools approach. There are two possible judicial approaches to the assessment of the entitlement of the parties to property under the act namely the global approach which involves the division of the parties assets on an overall proportion of the global view of total assets and the asset by asset approach (sometimes referred to as the two pools approach) which involves a determination of the parties interests in individual items of property.
The High Court has held that either approach is a legitimate exercise of the discretion (Norbis v Norbis (1986) FLC 91–712).
Cases in which the asset by asset approach has been adopted include:
a)Where the marriage was of short duration and during the marriage, the parties strictly divided and kept their own assets separate from each other (McMahon & McMahon (1995) FLC 92-606);
b)were assets were divided informally at separation and there was a long delay between separation and proceedings particularly where one or both parties have built up significant assets after separation (Z & Z (2005) FLC 93-241 and Polonius & York [2010] FamFC 228);
c)where there was a pension in the payment phase (PJM and STM (2005) FLC 93-242, and Hayton & Bendle [2010] FamCA 592).
I adopt an asset by asset approach in the circumstances.
First Pool
As said previously this was a very short relationship. At the commencement of the relationship the husband owned and operated the business known as C Pty Ltd. During the relationship the wife did some administrative work however, the husband treated the business as his own and worked tirelessly to build it, and indeed post separation continued to treat the business as his own. Post separation the husband bought and sold plant and equipment and in doing so at times increased the indebtedness and at other times reduced the indebtedness. As at the close of the case the evidence established that the husband had slightly increased the overall net position of the business.
I am satisfied that it is appropriate to separate the business and the liabilities associated with the business from the asset pool as it is a fact that the wife contributed very little to the business and both parties agree that the husband should retain the business and the debt associated with the business. In the circumstance I am not persuaded it is just and equitable to adjust the husband’s interest in the business.
Remaining Assets (second pool)
It is also clear from the table referred to that the wife does not include the value of the Motor Vehicle 1, the furniture and it was further submitted that the value of the boat should also not be included in the pool.
In relation to the Motor Vehicle 1, the evidence establishes that the vehicle was provided to the parties by the maternal grandfather. The purchase price was to be approximately $12,000.00. The evidence establishes that the parties paid approximately half of that purchase price. Furthermore after settlement the vehicle was returned to the maternal grandfather and no money was returned to the wife or husband. That vehicle has subsequently been sold and the maternal grandfather retained the proceeds. In those circumstances the Motor Vehicle 1 should be removed from the asset pool.
With regards to the furniture and the boat the wife submits that as she will be retaining the furniture and the husband will be retaining the boat then effectively they should not be included in the pool.
There was no valuation provided for either the furniture or the boat and in those circumstances, although the wife conceded under cross examination that the furniture “could be worth $10,000.00” I am not persuaded that I have sufficient evidence to include those items together with a value. They will be excluded from the pool.
The husband wants to include “add backs” relating to a tractor that was sold by the respondent and some livestock that ultimately perished.
The High Court referred to identifying the “existing” legal and equitable interests of the parties in the property (Stanford). As a result post Stanford there has been some doubt as to whether add backs could be considered in section 79 proceedings.
Prior to Stanford the Full Court had identified three types of add backs (AJO & GRO (2005) FLC 93-218) as follows:
a)where the parties of expending money on legal fees;
b)where there has been a premature distribution of matrimonial assets; and
c)in the circumstances outlined by Baker J in Kowaliw & Kowaliw (1981) FLC 91-092 where he said:
“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 paragraph (a) and (B) above having economic consequences is clearly in my view relevant under section 75 (2)(o) the applications for settlement of property instituted under the provisions of section 79.”
It would seem that the husband relies upon the premature distribution of an asset in relation to the tractor and the reckless, negligent or wanton reduction of the asset in relation to the livestock.
Turning to the tractor, it is a fact that the wife sold a tractor post separation and retained those monies. It is important to distinguish “premature distributions” from the reasonable day-to-day expenses of the parties. (Kouper & Kouper (No. 3) [2009] FamCA 1080 and Shimizu & Tanner [2011] FamCA 271). The wife says that she used the income derived from the sale of the tractor to meet her reasonable expenses.
It is also a fact that the husband disputed his child support assessment post separation and that as a result the wife did not receive the full entitlement to child support throughout 2019. Ultimately the Child Support Authority determined that the husband's income was $89,000.00 during the relevant period and as a result there was an arrears that the husband was required to pay. The husband has repaid the arrears. However during the time that he was not meeting the full obligation of child support I am satisfied that the wife had very limited funds available to her.
It is a fact that the wife has the primary care of two very young children and was required to meet the interest only payments on the mortgage which averaged at $350 per week. In those circumstances I am satisfied that the use of the funds derived from the sale of the tractor were for the purpose of meeting reasonable day-to-day expenses of the wife and in those circumstances the sale proceeds will not be added back nor will they be considered under section 75(2)(o).
In relation to the livestock, it is a fact that the husband had purchased some livestock and had erected a paddock on the A Street, Town B property. It is also a fact that the husband wanted to retain the livestock and that he had asked the wife not to remove the livestock until such time as a variation to the protection order protecting the wife could be heard and determined in the magistrates Court. The wife arranged for the removal of the livestock with the assistance of a vet on the day before the variation to the protection order could be heard. Unfortunately the livestock died.
The husband asserted that the livestock were worth $7850 and the wife asserted that the livestock were worth $2000. It was the husband's case that he purchased the livestock from a specialist breeder. The breeder was not called to give evidence. There was no value provided to the court in relation to the livestock.
In circumstances where I am satisfied on the evidence the wife had given the husband permission to return to the property, notwithstanding the protection order, to remove the livestock and he had not done so it was appropriate for her to have the livestock removed.
I am also satisfied on the evidence that the wife took all reasonable steps available to her to arrange for the safe transfer and subsequent placement of the livestock. I am satisfied it was an unfortunate accident, that the livestock perished. In those circumstances I am persuaded that the livestock should be excluded from the property pool and otherwise not considered pursuant to section 75(2)(o).
Accordingly, the gross value of the non-superannuation assets available for distribution is $625,000 represented in the real property situated at A Street, Town B (the A Street, Town B property).
Liabilities
It is accepted that the liability attached to the A Street, Town B property in the form of a mortgage should be included in the net asset pool. That liability is currently $403,100.00.
The husband wishes to include the Rocket loan, loans to his parents and the loans encumbering plant and equipment. The wife does not seek to include any of those loans.
I have already provided reasons as to why the business asset should be identified as a separate pool from the remaining property pool. For those same reasons I am satisfied that the loans encumbering plant and equipment associated with the business should also be separated from the remaining property pool and that the husband remain responsible for all the debt associated with the business.
It is conceded by both parties that the Rocket loan had been established prior to the parties’ relationship. It was the evidence of the husband that as at 6 August 2014 the outstanding amount relevant to that loan was $88,294.18. Furthermore the husband gave evidence that he had not drawn down any further monies from the Rocket loan and that during the relationship he paid the sum of approximately $1000.00 a month towards the reduction of the loan. As at the date of trial the husband gave evidence that the loan balance was $57,986.00 and that he had paid an additional approximately $2000.00 toward the loan on 29 January 2018.
The husband gave evidence that the Rocket loan is a business liability (paragraph 31 of his affidavit filed 18 July 2019). In those circumstances for the reasons previously provided I am not satisfied that the Rocket loan should be included in the remaining asset pool.
With respect to the loan from the applicant's parents in the sum of $26,820.00 the husband provides evidence that he found it necessary to borrow those monies from his parents to assist with cash flow. (Paragraph 45 husband's affidavit filed 18 July 2019).
During cross-examination the husband gave evidence that he used some of those monies toward expenses relating to the business including the purchase of some items for the business and to meet day-to-day liabilities of the business. In those circumstances, the wife has had no benefit from those monies and I am satisfied that the husband should be liable for those monies solely. For these reasons the loan from the applicant's parents should also be excluded from the remaining net asset pool. It follows that the only liability therefore should be in relation to the mortgage in the sum of $403,100.00.
Both parties contended that their superannuation should be included in the property pool and I am satisfied that their superannuation entitlements should be included in the property pool. Accordingly, the net asset pool is as follows;
Assets Ownership Value A Street, Town B Respondent $625,000[1] Super Fund F Applicant $28,628[2] Super Fund E Respondent $76,468[3] Sub total $730,096 Liability Mortgage on A Street, Town B Respondent $403,100 Total net pool including superannuation $326,996 [1] Affidavit of Ms G filed 23 August 2019
[2] Agreed value
[3] Agreed value
Is it just and equitable to make an order
The evidence establishes that the parties both contributed to the acquisition and construction of the A Street, Town B property. Post separation the wife has continued to live in the A Street, Town B property to the exclusion of the husband. As a result of the irretrievable breakdown of their marriage both parties can no longer enjoy the benefits of that property. Furthermore, the parties supported each other during their very short relationship and their superannuation increased in value over that short period of time. In those circumstances it is just and equitable to adjust the property entitlements.
Contributions to the assets
The evidence establishes that the wife contributed $19,000.00 in cash at the commencement of the relationship. Furthermore I am satisfied that the wife held superannuation in the sum of $34,129.72 at the commencement of the relationship (annexure M6 of the wife’s affidavit filed 18 July 2019).
The evidence also establishes in my view that the applicant husband had approximately $20,000.00 in superannuation (see paragraph 13 of his affidavit filed 6 November 2017) and a car worth approximately $10,000.00 (see paragraph 17 of the affidavit filed 18 July 2019).
The husband also owned and operated the business known as C Pty Ltd at the commencement of the relationship. The total indebtedness of that business at that time is not known. The husband gave evidence that his parents arranged a loan from Westpac bank (the Rocket loan) secured against their property and that it was used to “buy equipment for my business and to fund the construction of the dwelling which I then occupied on my parents land” (paragraph 14 of the affidavit of the husband filed 18 July 2019). Under cross-examination the husband confirmed that the balance of the loan as at 6 August 2014 was $88,294.18.
It is a fact that a cottage was built on the applicant's parent’s property. There is no formal valuation of that cottage however the paternal family, including the husband assert that the value of the cottage was approximately $75,000. Whilst being cross-examined the husband confirmed that the Rocket loan was used for the purchase of equipment and for the purchase of materials for the construction of the cottage. The husband was questioned as to the cost of a chipper that was bought for the business and he said it was approximately $40,000-$50,000. It was put to the husband that the construction therefore could not have cost $75,000. The husband did not concede this and was emphatic that it did cost $75,000 and that he used some of his wage to help fund it.
I am not satisfied that there is sufficient evidence to support a finding that the value of the construction on the paternal parents land was worth $75,000.00. Furthermore I am not satisfied that any value in that dwelling was contributed to the assets of the marriage for the reasons that follow further.
The husband also asserts that he brought $25,000.00 worth of cash savings into the relationship (see paragraph 17 of his affidavit filed 18 July 2019).
The evidence establishes in my view that the parties cohabited from August 2014. It is a fact that the husband made cash deposits into the parties joint account, as follows;
a)on 7 October 2014 $10,000.00
b)on 20 August 2016 $6000.00; and
c)on 9 January 2017 $4000.00.
The total value of those deposits amount to $20,000.00 however the parties had been living together for approximately two months when the first of the deposits was made and it was the evidence of the wife that it represented cash payments received by the husband at a time when the wife was assisting him in the administration of his business.
The wife asserts that in those circumstances the deposit of $10,000.00 could not be assessed as an initial contribution by the husband but rather as a joint contribution of the parties post cohabitation. I am persuaded by the wife's evidence on this point and accordingly I do not accept that the husband contributed those monies or the subsequent monies deposited into the account by way of an initial contribution.
In those circumstances I am satisfied that the wife contributed more by way of initial contribution than the husband and that importantly (see Pierce & Pierce (1999) FLC 92-844) that this initial contribution was the springboard for the acquisition of the A Street, Town B property.
Contributions during the relationship
There was much evidence called in relation to the contributions made by the parties and their extended family to the acquisition and construction of the A Street, Town B property.
The A Street, Town B property was previously owned by the applicant's parents. Their evidence is that they purchased the property for approximately $270,000.00.
The husband and his family assert that the purchase price agreed to by the applicant and respondent came about as a result of a conversation that occurred at both the applicant parent's home and the cottage wherein it was allegedly agreed that the value of the A Street, Town B property would be reduced by $75,000.00 such sum representing the value of the cottage on the husband's parents farm.
The wife categorically denied that there was any such conversation or agreement. Her evidence was that they paid the appropriate price for the unimproved land at the time. Furthermore the evidence establishes that the rateable value of the land decreased after the applicant parents bought the land.
The respondent bought the land from the applicant's parents for the sum of $225,000.00 (annexure M3 of the affidavit of the wife filed 18 July 2019. Exhibit 3 is a valuation dated 14 January 2015, wherein the indicative midpoint value of the A Street, Town B property at that time was $215,000.
Annexure M5 of the wife’s affidavit filed 18 July 2019 is a copy of the council property search of the A Street, Town B property as at 30 June 2013 showing the value of the unimproved land at $235,000.00. Annexure M4 of the same affidavit is a copy of the Council property search for the A Street, Town B property showing a value of the unimproved land as at 30 June 2014 as $212,500.00.
In the husband's affidavit filed 6 November 2017 the husband gives evidence that his parents bought the land for $270,214.00 and at paragraph 18 says that;
“a parcel of land that had been earlier acquired by my parents were subdivided into two lots. One of those lots has since been transferred to my sister and one of them into the respondent's name.”
In light of all that evidence I cannot accept that the parties agreed to reducing a purchase price by $75,000.00 to achieve a purchase price of $225,000.00 in circumstances where the true value of the unimproved land could not have amounted to $300,000.00 at the time of purchase. In those circumstances I am not persuaded that any value in the construction of the cottage on the applicant parents land was of benefit to these parties.
The evidence establishes that it was the applicant father's builder’s license that was used by the parties for the purpose of obtaining an owner builder license permit.
It is asserted by the husband that his father was the builder his father together with the use of subcontractors substantially built the dwelling that now rests on the A Street, Town B property.
The wife asserts that the husband's father attended the property from time to time and performed some supervision however did very minimal work himself due to the fact that he was off work as a result of an accident that resulted in him having double vision.
Mr Matley senior was cross-examined and he conceded that he is a registered builder that he did some work with subcontractors that he had double vision and that he was on sick pay and holiday pay for about nine months. He also conceded that he tripped over a few times whilst on site and that the last time he had built anything was 20 years previously.
Furthermore he conceded that it was the wife who organised all of the subcontractors, materials, deliveries and payments.
In light of the concessions made by Mr Matley senior I am satisfied on the evidence that he made a contribution to the building of the dwelling however, it was not as significant as the husband attempted to make out.
There was an issue between the parties as to whether the land had been cleared prior to the purchase of the land by the respondent or not. The paternal family assert that they had done substantial clearing work to the property prior to that purchase and the wife and her father assert that the land consisted of a bush block with very minimal cleared space at the rear of the property. It was the wife's case that her father did a good deal of the clearing.
In assessing the evidence in relation to the clearing of the land I cannot make an ultimate determination as to who cleared what, when and to what extent. I am satisfied that both the applicant, together with his family and the respondent, together with members of her family contributed to the clearing of the land.
I am satisfied on the evidence of Mr H, the wife's father, that he did all of the drainage work for the construction of the house and that in doing so he used some of his employees and that they were subsequently paid for their work. Mr H also conceded that the husband dug some trenches with the use of a digger that had been lent to the husband by Mr H free of charge.
The evidence otherwise establishes that after the children were born the wife remained at home assisting in the administration of the business and the husband worked long hours building his business. Furthermore, I am satisfied that the business requires hard physical labour and that the income earned by the business and as a result available to the parties was substantially contributed to by the husband. In other words the husband was primarily responsible for the financial contributions to the marriage and the wife was substantially responsible for the non-financial contributions to the marriage.
The evidence also establishes that the wife made far greater contributions to the welfare of the family due to her primary role in caring for the children on a day-to-day basis.
Post separation the wife has predominantly been responsible for the maintenance of the property and for contributions to the interest component on the mortgage. Whilst I note that the wife conceded that some lantana had grown over the livestock enclosure I am satisfied that the wife has made greater contributions to the matrimonial property in the form of the A Street, Town B property post separation. Furthermore the wife has had the predominant care of the children post separation with the husband having minimal involvement with the children's care due to their young age and his desire to grow his business post separation.
In those circumstances in assessing contributions of the parties I am satisfied that the wife has made greater contributions to the property and assess those contributions at 58 / 42 in favour of the wife.
Section 75 factors
Both parties are of a similar age and both are in good health.
The wife is on very limited income and without further training will have some difficulty in obtaining employment in her chosen field.
The husband will retain the business. The evidence establishes that the business receives not insubstantial cash payments from time to time. Furthermore the husband has a part-time interest in his hobbies and this also is an avenue for the husband to derive some income. His evidence was that he completed “five jobs” and that he received between $1000.00 and $2000.00 per job.
Furthermore whilst being cross examined the husband conceded that he had utilised cash received within a very short period of time totalling $31,950.00. The business employs four people, including the husband's current partner who is pregnant with their child.
The evidence also establishes that the husband's taxable income in the July 2018 to June 2019 financial year is $89,000.00. Furthermore, the business that the applicant husband retains pays to his current partner $70,000.00. The husband gave evidence that he intends to be living with his partner by early 2020.
The wife does not work and earns some very minimal income in the sum of $135 per week from horse agistment.
In those circumstances I am satisfied on the evidence that there is a significant financial disparity between the applicant husband and the respondent wife and in those circumstances and adjustment must be made in favour of the wife.
The parties have two very young children and currently there are consent orders in place that provide for the children to spend three nights with their father each fortnight, split over two weeks, with the wife otherwise being primarily responsible for their care. Although the parties agreed to review those arrangements in 2021, I am satisfied on the evidence in its totality that the children will remain in the primary care of the wife for some considerable period of time. In those circumstances there must be an adjustment in favour of the wife.
The evidence establishes that the husband is currently expecting a newborn child with his current partner. In circumstances where the evidence establishes that he earns $89,000.00 and she earns $70,000.00 or a combined total of the $159,000.00 I am not satisfied that his commitment will be significant such that there should be an adjustment in his favour.
There was a good deal of cross-examination of the wife as to why she could not move to rented premises, or indeed buy a property of lesser value in the same area. The wife argued that she had lived in the A Street, Town B property since its construction including with the children of the relationship for their entire life. Her evidence was that notwithstanding the property consists of 30 acres she was very happy to be living on the property as it was close to her parents and afforded her the opportunity to earn some limited income through the agistment of horses.
The husband argued that he should retain the A Street, Town B property because it would mean that his business would be more profitable in the future because he would no longer need to rent, he could store machinery on the land and he could dump on the land, and it was next door to his sister.
I am satisfied that if the wife is able to pay to the husband an amount, that I have decided is just and equitable that she should retain the A Street, Town B property. Furthermore if she cannot make those payments I am satisfied it is just and equitable to provide orders that would allow the husband the opportunity to make an appropriate payment to the wife in order to retain the property. It follows that if neither party could raise sufficient funds to pay out the other, the sum I have ordered then the property should be sold.
With regards to section 75(2)(o) I am of the view that the circumstances of this marriage make it just and equitable for there to be an adjustment of the wife’s super to the husband. The wife seeks an order that the husband received $25,000 of her superannuation. This would bring about an almost equal distribution of the parties current superannuation entitlements.
I am of the view that the payment of $25,000.00 to the husband's superannuation from the wife’s superannuation entitlement is justified and just and equitable either if the wife is to pay out the husband or he is to pay out her. If the wife is required to pay the husband and indeed my orders provide that she be given the opportunity to do so at first instance then having regard to her limited ability to raise funds and my finding that it is just and equitable for her to remain in the A Street, Town B property than this will require a lower cash adjustment.
If the wife cannot raise sufficient funds to pay out the husband then for the reasons previously outlined I am of the view that the husband should be provided the opportunity, as indeed my orders say to pay out the wife. In circumstances however, where the wife has limited other financial resources and income I am satisfied that he should still receive some superannuation from the wife thereby requiring him to pay a slightly higher sum by way of cash adjustment.
Having considered the relevant section 75(2) factors I am satisfied that there should be a further 12% adjustment in favour of the wife, thereby achieving an overall adjustment to the wife of 70% in her favour, and 30% to the husband.
In those circumstances the wife is entitled to net assets worth $228,897.20 and the husband is entitled to net assets worth $98,098.80. After the payment of $25,000.00 from the wife's superannuation entitlements to the husband's superannuation fund the wife would be required to pay to the husband a cash adjustment of $44,470.00.
In the event the wife cannot raise those funds within 60 days of the date of the orders, then my orders provide for the husband to be given 60 days in which to make a cash payment to the wife. After payment of $25,000.00 from the wife's superannuation entitlement to the husband's superannuation fund that cash adjustment would be in the sum of $177,429.20.
The orders sought by the wife would see an adjustment to the husband of 66% in his favour on his pool or 15% in his favour on her pool. Neither outcome is just and equitable. The orders she seeks would see an adjustment of 15% to the husband of the pool I have identified this too would not achieve a just and equitable outcome.
The orders sought by the husband would see an adjustment to the wife of 145% based on his pool, 33% based on the wife’s pool and 33% based on the pool I have identified. These orders would not achieve a just and equitable outcome.
Having regard to the fact that the wife came into the relationship with substantially more assets than the husband and indeed the husband was in a negative asset position at the commencement of the relationship and furthermore having regard to the considerations referred to throughout my reasons I am satisfied that the adjustment I have reached is just and equitable in all of the circumstances.
I certify that the preceding one hundred and five (105) paragraphs are a true copy of the reasons for judgment of Judge Middleton
Date: 13 March 2020
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Procedural Fairness
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Jurisdiction
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Stay of Proceedings
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Constructive Trust
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