Mayhew & Fairweather

Case [2021] FamCA 614

FAMILY COURT OF AUSTRALIA

Mayhew & Fairweather [2021] FamCA 614

File number(s): SYC 13 of 2017
Judgment of: WILSON J
Date of judgment: 20 August 2021
Catchwords: FAMILY LAW – ALTERATION OF PROPERTY INTERESTS – lengthy marriage – inheritance received by wife – superannuation pension to husband – one adult child – orders made dividing assets as to 60% to the wife.
Legislation: Family Law Act 1975 (Cth) ss 75(2), 79
Cases cited:

Bacall & Zagar [2020] FamCA 350

Chang v Su (2002) 170 FLR 244

Dickons v Dickons (2012) 50 Fam LR 244

Fitzgerald-Stevens & Leslighter [2015] FCWA 25

Frederick v Frederick (2019) 60 Fam LR 1

Hayton v Bendle (2010) 43 Fam LR 602

Hepworth v Hepworth (1963) 110 CLR 309

In the Marriage of Aleksovski (1996) 20 Fam LR 894

In the Marriage of Black & Kellner (1992) 12 Fam LR 343

In the Marriage of Crawford (1979) 5 Fam LR 106

In the Marriage of Kannis (2002) 30 Fam LR 83

In the Marriage of Lee Steere (1985) 10 Fam LR 431

In the Marriage of Money (1994) 17 Fam LR 814

In the Marriage of Pierce (1998) 24 Fam LR 377

In the Marriage of Weir (1992) 16 Fam LR 154

In the Marriage of White (1982) 8 Fam LR 512

Jabour v Jabour (2019) 59 Fam LR 475

Semperton v Semperton (2012) 47 Fam LR 626

Singerson & Joans [2014] FamCAFC 238

Stanford v Stanford (2012) 247 CLR 108

Wallis & Manning [2017] FamCAFC 14

Wirth v Wirth (1956) 98 CLR 228

Zagar & Bacall (2020) 61 Fam LR 601
Number of paragraphs: 147
Date of last submission: 29 June 2021
Date of hearing: 21-23 June 2021
Place: Melbourne
Counsel for the Applicant: Mr P. Batey
Solicitor for the Applicant: Broun Abrahams Burreket
Counsel for the Respondent: Mr R. Lethbridge SC
Solicitor for the Respondent: De Saxe O’Neill Family Lawyers

ORDERS

SYC 13 of 2017
BETWEEN:

MS FAIRWEATHER

Applicant
AND:

MR MAYHEW

Respondent

ORDER MADE BY:

WILSON J

DATE OF ORDER:

20 AUGUST 2021

THE COURT ORDERS THAT:

1.The court split the net asset and superannuation pool of the parties into two pools comprising –

(a)pool 1, all the assets, liabilities and superannuation of the parties other than the property situate B Street Suburb C in the State of NSW (“The Suburb C Property”) and the liabilities comprising –

(i)the CBA Mortgage secured over the Suburb C property;

(ii)the CGT incurred on the sale of the Suburb C property; and

(iii)the selling costs of the Suburb C property; and

(b)pool 2, the Suburb C property and the associated liabilities comprising –

(i)the CBA Mortgage secured over the Suburb C property;

(ii)the CGT incurred on the sale  of the Suburb C property;

(iii)the selling costs of the Suburb C property.

2.In respect of pool 1 –

(a)within 42 days of the date of making of this order the husband must do all acts and things and pay all moneys necessary to discharge the registered first…

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Mayhew & Fairweather [2021] FamCA 614
Case
[2021] FamCA 614
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CaseChat Overview and Summary

In the matter of *Mayhew & Fairweather*, heard by Wilson J, the applicant, Ms Fairweather, and the respondent, Mr Mayhew, sought orders for the alteration of their property interests following a lengthy marriage and subsequent separation. The dispute concerned the division of a significant asset pool, including various properties, superannuation interests, and shareholdings, with a particular focus on the proceeds from the sale of a property located at Suburb C.

The court was required to determine whether making an order under section 79 of the *Family Law Act 1975* (Cth) was just and equitable in the circumstances, and if so, what alteration of property interests would be just and equitable. This involved assessing the parties' initial contributions, their subsequent direct and indirect financial and non-financial contributions throughout the marriage and post-separation, and considering the specific assets and liabilities within their combined pool. The court also had to address the division of superannuation interests and the implications of an inheritance received by the applicant.

Wilson J applied the principles of section 79 of the *Family Law Act 1975* (Cth), requiring the court to be satisfied that any order made was just and equitable. The court considered the parties' contributions holistically, noting that while initial contributions were weighted in favour of the respondent, their contributions to the acquisition, conservation, and improvement of property during the marriage were essentially equal, excluding inheritances. The court found the applicant's inheritance to be substantially greater than the respondent's. The decision adopted a "two-pool" approach to manage the uncertainty surrounding the sale of the Suburb C property, separating it and its associated liabilities from other assets.

The court ordered an alteration of property interests as to 60% in favour of the applicant, Ms Fairweather. This was achieved through a detailed division of assets and liabilities, including specific orders for the sale of the Suburb C property, the transfer of other properties and shareholdings, and the division of superannuation interests. The orders also included provisions for indemnities and the release of parties from certain debts, with a registrar empowered to execute documents if a party refused to comply.

Orders

Orders of the court

SYC 13 of 2017

BETWEEN:

MS FAIRWEATHER

Applicant

AND:

MR MAYHEW

Respondent

ORDER MADE BY:

WILSON J

DATE OF ORDER:

20 AUGUST 2021

THE COURT ORDERS THAT:

1. The court split the net asset and superannuation pool of the parties into two pools comprising –

(a) pool 1, all the assets, liabilities and superannuation of the parties other than the property situate B Street Suburb C in the State of NSW (“The Suburb C Property”) and the liabilities comprising –

(i) the CBA Mortgage secured over the Suburb C property;

(ii) the CGT incurred on the sale of the Suburb C property; and

(iii) the selling costs of the Suburb C property; and

(b) pool 2, the Suburb C property and the associated liabilities comprising –

(i) the CBA Mortgage secured over the Suburb C property;

(ii) the CGT incurred on the sale of the Suburb C property;

(iii) the selling costs of the Suburb C property.

2. In respect of pool 1 –

(a) within 42 days of the date of making of this order the husband must do all acts and things and pay all moneys necessary to discharge the registered first mortgage number …09 to the Commonwealth Bank of Australia secured over the title to the property situate at and known as 1 and 2 D Street, Suburb F being the whole of the land comprised in certificate of title folio identifier …;

(b) within three months from the date of making of these orders the wife must vacate the property 2 D Street, Suburb F; and

(c) within 42 days of the date of making of this order the husband must –

(i) do all acts and things and pay any monies necessary to discharge the mortgage to Westpac Banking Corporation secured over the property G Street, Suburb H; and

(ii) do all acts and things and sign all documents necessary to transfer to the wife the whole of his right, title and interest in the property situate at and known as G Street, Suburb H (“the Suburb H property”) being the whole of the land comprised in certificate of title folio identifier …;

(d) pending the transfer of the Suburb H property to the wife pursuant to order 2(c)(ii) above the husband must pay as and when they all due the outgoings in relation to the Suburb H property including the following –

(i) land tax;

(ii) council rates;

(iii) water and sewerage rates; and

(iv) periodical maintenance and repairs necessary to keep the Suburb H property in a state of good repair, fair wear and tear excepted;

(e) the husband must do all acts and things and sign all documents necessary to cause the rental income from the Suburb H Property to be paid to the wife as and from the date of transfer of the Suburb H property to her;

(f) within 28 days of the date of making of these orders the husband must do all acts and things and sign all documents necessary to –

(i) transfer to the wife all of his right, title and interest in his shareholding in K Limited;

(ii) assign to the wife his right, title and interest in any issued share capital together with any loan account in K Limited; and

(iii) resign any offices held in K Limited;

(g) the wife must indemnify the husband and keep him indemnified from and against all claims, actions, suits, demands or liabilities arising out of, or in connection with, the husband having been a director and shareholder of K Limited and in respect of any amounts owing by him to K Limited as may be reflected in the loan accounts of that entity;

(h) pursuant to s 90XT(1)(b) of the Family Law Act 1975 (Cth) whenever the Trustee of the J Super Fund (“the Super Fund”) makes a splittable payment out of the interest held by the husband in the Super Fund the wife shall be entitled to be paid 100% of the splittable payment and that there shall be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made, but for these orders;

(i) order 2(h) have effect from the operative time and the operative time for these orders is the fourth business day from the date of service of the orders on the Trustee;

(j) orders 2(h) and 2(i) above bind the Trustee of the Super Fund;

(k) upon compliance with order 2(h) above, the husband and the wife must do all acts and things and sign all documents necessary for the husband to resign as a member of the Super Fund and to resign as a Trustee of the Super Fund;

(l) within four weeks of the date of the making of the orders, the husband must do all acts and things and serve on L Company, Accountant, with an authority to release all records relating to the J Super Fund to the wife;

(m) within 28 days of the date of making of this order –

(i) the husband and the wife must do all acts and things and sign all documents necessary to distribute to the wife the monies standing to the credit of the bank account in the joint names of the parties with V Bank New Zealand, account number …00 (“the joint bank account”) and thereafter close the joint bank account; and

(ii) pending the closure of the joint bank account pursuant to order 2(m)(i) above, the husband and the wife are restrained from operating on that account, save for the purposes of giving effect to order 2(m)(i) above;

(n) in accordance with s 90XT(1)(a) of the Family Law Act 1975 whenever a splittable payment becomes payable in respect of the superannuation interest of the husband in his Mayhew Private Super Fund with M Company, Fund No. ….87 Membership No. …, the wife shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a base amount of $800,000 and there will be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these orders;

(o) order 2(n) above binds the Trustee of M Company and these orders take effect from the operative time being the fourth business day after the date of service of these orders on the Trustee;

(p) within 30 days of the date of settlement of the sale of the Suburb C property the husband pay to the wife a cash adjustment as is required to provide the wife with 60% of the assets of the parties having regard to the other assets to be retained by the wife including the proceeds of sale of the Suburb C property provided for in order 3(e) below;

(q) except as specifically provided for in these orders, the wife is declared the sole owner of and the husband has no interest in –

(i) K Pty Ltd;

(ii) the wife’s share portfolio;

(iii) the wife’s motor vehicle;

(iv) the wife’s bank accounts;

(v) the wife’s superannuation; and

(vi) all other assets of whatsoever nature and kind in the wife’s possession, ownership and/or control as at the date of these orders;

(r) except as specifically provided for in these orders to the contrary, the husband is declared and the wife has no interest in –

(i) the property 1 and 2 D Street, Suburb F;

(ii) the husband’s bank accounts;

(iii) the husband’s motor vehicles;

(iv) the husband’s superannuation;

(v) the husband’s share portfolio; and

(vi) all other assets of whatsoever nature and kind in the husband’s possession, ownership and/or control as at the date of these orders;

(s) except as specifically provided for by any order to the contrary, each of the husband and the wife releases the other from all debts owing from one to the other; and

(t) except as specifically provided for by any order to the contrary –

(i) the wife indemnifies the husband from, and in respect of, all actions, claims, suits and demands as may be made against the husband in relation to all liabilities in the name of the wife; and

(ii) the husband indemnifies the wife from, and in respect of, all actions, claims, suits and demands as may be made against the wife in relation to all liabilities in the name of the husband.

3. In respect of pool 2 –

(a) within 28 days of the making of these orders the wife must do all things and sign all documents to cause the Suburb C property to be offered for sale by private treaty at a sale price not less than $1,870,000;

(b) for the purpose of order 3(a) herein, the wife must select a selling agent in the local area and the agent so selected shall be the selling agent for the purpose of these orders;

(c) in the event the Suburb C property is not subject to an exchange of contacts within six weeks of first being listed for sale in accordance with order 3(a) herein, the wife is to do all things and sign all documents to cause the Suburb C property to be submitted for sale by public auction with a reserve to be advised by the selling agent;

(d) in the event the Suburb C property is not subject to an exchange of contracts pursuant to the auction provided in order 3(c) herein, then the Suburb C property is to be resubmitted to successive auctions no more than 4 weeks apart at a reserve 5% less than the preceding reserve until sold; and

(e) upon settlement of the sale of the Suburb C property, the wife must do all acts and things and sign all documents necessary to cause the proceeds of sale to be applied and distributed in the following manner and priority –

(i) in payment of agent’s commission, advertising expenses and legal costs of the conveyancing;

(ii) in payment of the amount required to discharge the mortgage to the Commonwealth Bank of Australia secured on the title of the Suburb C property; and

(iii) the balance to be paid to the wife;

(f) upon settlement of the sale of the Suburb C property in accordance with Orders 3(a), 3(c) or 3(d) herein, the wife must cause her tax return in the financial year of the sale, to be prepared and submitted to the ATO for the purpose of calculating the Capital Gains Tax incurred on sale of the Suburb C property, and within seven days of the wife providing to the husband –

(i) the ATO assessment of CGT attributable to the sale of the Suburb C property; and

(ii) a statement of the selling costs incurred in the sale of the Suburb C property;

the husband shall pay to the wife 60% of the total CGT and selling costs as defined in orders 3(e)(ii) and 3(e)(iii) herein; and

(g) in the event that the receipt by the wife of the proceeds of sale of the Suburb C property cause her to receive in excess of 60% of the assets pursuant to order 2(q) above then the wife must pay to the husband the sum received in excess of 60% of the asset pool.

4. In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these orders, a registrar of the court be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.

5. Pursuant to s 117(2) of the Act, in respect of any action taken pursuant to order 2(t) above, the defaulting party will pay the other party’s costs of, and incidental to, that action as agreed, and failing agreement as assessed.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

For the reasons that follow, in my judgment – (a)the making of an order under s 79 of the Family Law Act is just and equitable in the circumstances of this case; and(b)an alteration of property interests as to 60% in favour of the applicant is just and equitable.SHORT NARRATION OF RELEVANT BACKGROUND The applicant is a 63 year old company director with a master’s degree from N University. The respondent is a 71 year old health professional with a master’s degree from N University. The parties commenced cohabitation in 1990, married in 1992, then separated,[2] leading to a divorce order being made in 2017.[2] The applicant gave evidence that the final separation occurred on 15 October 2016 whereas the respondent gave evidence that the parties separated under one roof in February 2014. The property at 1 D Street, Suburb F, a dual occupancy, is the place of residence of each party, the applicant upstairs and the respondent downstairs. The parties have one child of their marriage, born in 1998, nearing 23 years of age. When they commenced cohabitation, the applicant was in full time employment with P Company as a health consultant and the respondent was in full time employment with P Company as a health professional.THE PARTIES’ BALANCE SHEET Before embarking on an analysis of the parties’ history in the acquisition and sale of property, it is necessary to record the legal principles that govern a proceeding commenced under s 79 of the Family Law Act. Under s 79(2) of the Family Law Act, the court (me, in this instance) must not make an order under s 79 unless satisfied that in all the circumstances, the making of an order under s 79 is just and equitable. Section 79(4) of the Family Law Act prescribes matters that must be taken into account in considering what order (if any) should be made under the section.[3][3] Stanford v Stanford (2012) 247 CLR 108 (at [35]). The requirements of s 79(2) and s 79(4) are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.[4][4] Ibid. The expression “just and equitable” qualitatively describes a conclusion reached after examination of a range of potentially competing considerations and cannot be exhaustively defined.[5][5] Mallet v Mallet (1984) 156 CLR 605, 608 and Stanford v Stanford (2012) 247 CLR 108, 120 (at [36]). Three fundamental propositions must not be obscured in relation to the exercise of the power conferred by s 79.[6][6] Stanford v Stanford (2012) 247 CLR 108, 120 (at [36]). First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.[7] The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.[8][7] Ibid (at [37]).[8] Ibid.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In support of the two pool approach Mr Batey contended that the sale price was yet unknown. He submitted as follows – Finally, to accommodate an agreed position of a sale of the Suburb C property with the resultant net sale proceeds being unknown for the purpose of calculating the selling commission and the CGT, the wife submits that a “two-pool” approach be taken with the Suburb C property, the secured mortgage, selling expenses and CGT in one pool (“Pool 2) , and the remainder of the parties assets in the other pool; (“Pool 1”) that would allow for adjustment from the net sale proceeds to accommodate the parties overall entitlements as found by the Court.[79][79] Paragraph 27 of the applicant’s submissions.CONCLUSIONS ON INITIAL CONTRIBUTIONS The discrepancy between the parties’ respective initial contributions has already been addressed. It was very much weighted in favour of the respondent.SUBSEQUENT DIRECT AND INDIRECT FINANCIAL CONTRIBUTIONS In the passages above I have recorded the parties’ direct and indirect financial contributions. The law requires that a holistic approach be adopted to the myriad of different contributions provided by each party. In this case, the marriage was lengthy and, irrespective of the debate about the precise date of separation, it was in the order of a quarter of a century. Upon separation the parties ceased to enjoy the common use of property. The express and implied assumptions that underpinned the property arrangements then in existence came to an end.[80] Hence, upon the parties separating the just and equitable requirement of s 79 is readily satisfied when as a result of a choice made between the parties (or one or other of them) the husband and wife no longer live in a marital relationship.[80] Stanford v Stanford (2012) 247 CLR 108, 121 (at [41] – [42]). When together living in a marital relationship, over somewhere between 24 and 26 years, the parties contributed their earnings to the acquisition, conservation or improvement of property of the parties. Each was in gainful employment for most of the marriage. Each paid various mortgage debts in reduction of them as well as funding renovation works associated with the improvement of several properties brought by each to the marriage. The court is not engaged in a cent-perfect mathematical calculation. I agree with Mr Lethbridge’s opening[81] when he submitted that the parties’ contributions other than in respect of inheritances, should be seen as essentially equal.[81] T5 L9 – 21 June 2021. The inheritances each party received were different. The respondent received $387,500 ($225,000 plus $162,500 in the quarter interest of the Suburb C unit) compared with the applicant’s receipt of AUD $1,537,531. In my view the applicant’s contribution by way of inheritance was substantially greater than was the respondent’s. So far as post-separation contributions were concerned, each expended sums, although the amounts involved were not the subject of precise evidence so no meaningful conclusions can be expressed.

Ratio Decidendi

Legal Principle Established

On either version,[52] both counsel described the relationship as lengthy. [52] Part 7 paragraph 2 of Mr Batey’s case outline and T5 L9-10 of Mr Lethbridge SC’s opening.POST-SEPARATION It was common ground that the Suburb F property came to be the parties’ places of residence subsequent to their separation. Works were undertaken to it. The applicant relied on expenditures made by her to the upstairs living area of that property. She also relied on her payment of expenditures for the parties’ son in respect of his clothing, bedding and heating.[53] She said[54] she has continued to meet veterinary expenses as well as costs of food and care in relation to the family dog. No details of sums actually paid in relation to post-separation expenses were put in evidence by the applicant. That said, the respondent did not challenge the fact of the applicant having made those payments.[53] Paragraph 52 of her 16 April 2021 affidavit.[54] Paragraph 55 of her 16 April 2021 affidavit. So far as the respondent’s post-separation financial contributions were concerned, the respondent gave evidence that he has met all sums due to the mortgagee of the Suburb F property since separation.[55] He said he paid school and college fees for the son after separation being – (a)school fees of $28,166; and(b)college fees of $63,138.[56][55] Paragraphs 57 and 59 of the respondent’s affidavit made 14 May 2021.[56] Paragraph 62 of the respondent’s affidavit made 14 May 2021. He said he paid repairs and renovation expenses associated with the Suburb H property, being $74,811 over the period 2019 and 2020. He also said that in early 2019 works to Suburb H were arranged[57] but were not completed until 2020. He said that in order to re-let the property, internal and external works were undertaken at a cost paid by him of $78,182. The respondent did not produce documentary verification of those sums he said he paid, even though the amounts were dollar-specific.[57] Paragraph 67 of the respondent’s 14 May 2021 affidavit.ASSESSING CONTRIBUTIONS Not only am I required to determine the parties’ respective initial contributions, but I am required to take into account the miscellany of contributions made by each party over the course of the marriage and subsequent to separation.[58] [58] In the Marriage of Pierce (1998) 24 Fam LR 377, Dickons v Dickons (2012) 50 Fam LR 244, Singerson & Joans [2014] FamCAFC 238, Wallis & Manning [2017] FamCAFC 14 and Jabour v Jabour (2019) 59 Fam LR 475, to name but a few authorities on point. The parties’ initial contributions have already been addressed. As has been mentioned already,[59] the initial contributions of the respondent substantially exceeded those of the applicant, his being $985,000 and hers being $97,500 that is to say hers was less than one tenth of his.[59] Paragraph 51 above. Relevantly paraphrased, under s 79(4)(a) I am required to take into account the financial contributions made directly or indirectly by or on behalf of each party to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them.