McGregor and Beaton
[2017] FCCA 927
•19 January 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| McGREGOR & BEATON | [2017] FCCA 927 |
| Catchwords: FAMILY LAW – Property proceedings. |
| Legislation: Family Law Act 1975, ss.75, 79, 106, Part VIII |
| Stanford & Stanford (2002) 293 ALR 70 In the marriage of Lee Steere (1985) FLC 91-626 Whitton & Whitton (2015) FAMCA 102 |
| Applicant: | MS MCGREGOR |
| Respondent: | MR BEATON |
| File Number: | NCC 1294 of 2015 |
| Judgment of: | Judge Myers |
| Hearing dates: | 17 October 2016, 18 October 2016 |
| Date of Last Submission: | 18 October 2016 |
| Delivered at: | Newcastle |
| Delivered on: | 19 January 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Sundstrom |
| Solicitors for the Applicant: | Schofield Muir Lawyers |
| Counsel for the Respondent: | Mr Bithrey |
| Solicitors for the Respondent: | Bilbie Dan |
THE COURT ORDERS THAT:
The proceeds of sale of the Property N property in the sum of $702,344.00 be divided $466,557.59 to the husband and $235,766.41 to the wife.
Any funds held in a controlled money account being the proceeds of sale of the Property N property exceeding $702,344.00 be divided between the parties 58% to the husband and 42% to the wife.
The wife be declared to be the owner of the sum of $120,000.00 held in the name of the parties with the (omitted) Bank and in furtherance of this order the husband and wife do all acts and things and sign all documents necessary to transfer to the wife ownership of the said sum of $120,000.00 held by the (omitted) Bank as security against a guarantee the parties gave for the wife’s daughter and the parties are to do all acts and things and sign all documents necessary to cause the (omitted) Bank to release the husband in respect of this guarantee within 28 days subject to the (omitted) Bank’s consent.
That within 42 days of today’s orders the husband and wife cause to be provided a minute of order to be made in Chambers that provides for a superannuation split from one or a number of the husband’s superannuation funds whereby the wife receives from the husband’s superannuation interests the sum of $23,818.72.
That the husband and wife shall ensure the husband’s superannuation fund or funds are provided procedural fairness as to the minutes of order providing the same not less than 28 days prior to providing the same to the Court in accordance with Order 3 above.
Otherwise than as provided for in these orders each party be declared to be the sole beneficial owner of all items of real property, money in bank accounts, shares in public or private companies, motor vehicles, superannuation, goods, chattels, insurance policies, furniture and furnishings and the like that stand in that party’s name or are in that party’s possession as at the date of these Orders.
In the event that either party refuses or neglects to execute any deed or instrument that may be required to give effect to these Orders within 14 days of a written request to do so, the Registrar of the Court be appointed pursuant to s.106A of the Family Law Act 1975 to execute such deed or instrument in the name of such party or parties and do all acts necessary to give validity to the operation to the deed or instrument. The registrar be empowered to sign documents on behalf of either party to effect orders.
IT IS NOTED that publication of this judgment under the pseudonym McGregor & Beaton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT NEWCASTLE |
NCC 1294 of 2015
| MS MCGREGOR |
Applicant
And
| MR BEATON |
Respondent
EX TEMPORE`REASONS FOR JUDGMENT
These are property proceedings between the applicant wife Ms McGregor and respondent husband Mr Beaton. The wife seeks the following property orders pursuant to section 79 of the Family Law Act1975:
i)that the parties do all acts and execute all documents necessary to cause the sum of $120,000.00 presently held by the (omitted) Bank as security for the loan of the parties to assist the wife’s daughter in respect of the establishment of the daughter’s business to be paid to the wife;
ii)the sum of $322,025.32 be paid from the controlled monies investment held by Schofield Muir Lawyers to the wife;
iii)the sum of $376,815.33 be paid to the husband;
iv)that one half of the interest earned on the aforementioned controlled monies investment held by Schofield Muir Lawyers be paid to each of the parties;
v)that the wife hereafter indemnify the husband against any liability arising from the loan of the parties by the (omitted) Bank as referred to in order 12 (a);
vi)that the base amount allocated to Ms McGregor out of the interest held by Mr Beaton and (omitted) Superannuation Scheme is $75,125.66.
Orders were sought that essentially provide or might be described as machinery provisions with respect to that superannuation split. The Court is not sure as to whether procedural fairness was afforded to that superannuation trustee and proposes to make a superannuation split. The court will discuss that issue further as to how the Court might require the parties to craft orders putting in place machinery provisions for a split to take place.
Further orders were sought with respect to the provision of personal documents. The Court notes that on an interim basis during the course of the hearing the Court made orders for the parties to provide to one another what might be described as chattels or goods including letters or otherwise documents in relation to the wife’s ancestry.
The wife sought an order that, except as otherwise provided for in these as between the parties, each party be declared to have no further interest in the items of personal property, any other assets or financial resources in the possession of the other except as otherwise provided for in the orders, and that any liability attaching of an asset received by a party shall become the sole responsibility of that party; and the parties shall indemnify the other against any further liability in respect thereof.
An order was sought by the wife with respect to a registrar being appointed to execute any documents behalf of the parties pursuant to section 106A seeking the appointment of a registrar of the Family Court. The Court accepts that the intention of the order that a registrar of the Federal Circuit Court be appointed.
During the course of the proceedings the husband sought the following property orders:
i)that within seven days the parties are to do all acts and execute all documents necessary so as to cause the sum of $120,000.00 presently held in the (omitted) Bank as security be assigned to the wife;
ii)the sum of $515,565.00 be paid from the controlled monies investment held by Schofield Muir Lawyers to the husband;
iii)the sum of $184,227.00 be paid from the controlled monies investment held by Schofield Muir Lawyers to the wife;
iv)one half of any interest one half of the interest that is accrued on the balance of the said controlled monies held by Schofield Muir Lawyers above $699,833.00 to each party;
v)the wife indemnify and keep indemnified the husband against any liability arising from the loan to the parties by the (omitted) Bank.
vi)Save as where otherwise provided, each party is to retain to the exclusion of the other, their rights and interest in any further property, superannuation or financial resource held in that party’s name, possession or control.
vii)Save as where otherwise provided, each party is to indemnify and keep indemnified the other in relation to any liability held in the party’s name, or secured against any property retained by that party pursuant to these orders.
An order was sought by the husband pursuant to section 106A of the Family Law Act1975 and the husband sought an order on a final basis that the wife pay the husband’s costs of the proceedings.
It should be noted that the purpose of the determination of the issue today is not in relation to costs. It is solely in relation to the section 79 application that is made by the parties. Each of the parties seek orders for costs. They may renew that application at the conclusion of the hearing, noting that it will be necessary they make that application to the Court within 28 days of the orders being pronounced, which is of course today.
By way of background; the husband was born on (omitted) 1957 and is currently 59 years of age. The wife was born on (omitted) 1961 and is currently 54 years of age. The wife had a child from an earlier relationship, Ms J, who is some 36 years of age. Sometime in 1983, the husband was injured whilst working as a (occupation omitted) and received a workers compensation payment of $135,000.00 for that injury, being paid the sum in approximately 1987.
The parties met and married on (omitted) 1989 and thereafter commenced living together. For the purpose of these proceedings, it needs to be made clear; the parties did not cohabit prior to marriage. At that time, the wife’s child Ms J was about 15 months of age. The husband suggested in the earlier part of the parties’ relationship that the wife began studying (omitted) at university as a mature age student. The wife suggests she was already studying. At paragraph 7.2 of the wife’s affidavit, she suggests she owed a HECS debt at the commencement of the relationship in relation to one year of her degree.
The husband suggested at the time of the parties marrying, the wife was involved in parenting proceedings in relation to Ms J. The husband deposes at paragraph 12 of his affidavit he supported the wife, in what the husband describes as an attempt to gain custody of Ms J, including providing emotional support and financial support. The husband suggests he paid around $7000.00 towards the wife’s legal costs. Both parties agree that at the time and the commencement of the relationship, the wife owned what might be described by measure as a household of furniture and furnishings, a motor vehicle, and had some $7000.00 worth of legal fees owing, and one year’s worth of HECS debt.
Similarly the parties agree that the husband had a motor vehicle, $135,000.00 being the proceeds of the said workers compensation payment and no debt. The husband deposes he was working at that time some 40 hours a week, earning some $25,000.00 per year in the (omitted) industry. The wife was studying part time and working as a part time (occupation omitted). The husband suggests that the wife graduated from university in 1989 with a student HECS debt of around $5000.00, which was thereafter deducted from her wages as a (occupation omitted).
The wife suggests that she commenced in a full-time casual (occupation omitted) position in 1990. The husband, by way of contrast, contends the wife worked two shifts per week until she was about six months pregnant with the parties’ child, Mr A, after which the wife stopped working. On (omitted) 1990, Mr A was born. Mr A suffered from a range of disabilities as a child, including intellectual disability, spinal problems and speech complications.
The wife describes Mr A as suffering a receptive and expressive language disorder, poor fine and gross motor skills and as having a mild intellectual disability. The wife suggests that she took Mr A to various activities, most in relation to his diagnosis. The parties purchased several properties during the course of their 24 year relationship, including properties at (omitted), (omitted), (omitted), (omitted), and Property N being the final home the parties resided in, that the Court might otherwise describe as the former matrimonial home.
With the exception of a property at (omitted) that had been purchased from the wife’s grandmother, the parties undertook building and renovation works at various properties with the parties making profits on the sale of those properties. The husband seeks to advance what is described as a springboard argument in respect of his initial contribution, in that he suggests it was the seed capital that allowed the purchase of the original property by the parties. The husband deposes to working full time as a (occupation omitted) during the relationship.
The wife suggests at paragraph 20 of her affidavit that over the period of the parties’ relationship, she generally earned an income equivalent to the husband’s income, plus a further one third of it. In reality, the Court accepts that both parties were working to the best of their capacity, taking care of Mr A and living together in what might be described as a genuine joint enterprise. The hard work done by the parties in respect of Mr A’s treatment throughout his childhood has seen him complete school and then an apprenticeship. Mr A now works as a qualified (occupation omitted) and lives with the father, although the father suggests he provides some ongoing assistance to Mr A.
The level of the husband’s assistance to Mr A is a matter of dispute between the parties. The husband deposes to the parties supporting Ms J in their household. The husband gives evidence that he took Ms J in “as one of his own” and played a major role in raising Ms J. The husband suggests paying for such things as Ms J’s dental braces, kindergarten, school and university costs and costs associated with Ms J playing in a (hobby omitted). The court accepts the husband assisted in the care of Ms J.
In 2011, the parties guaranteed a business loan for Ms J in the sum of $200,000.00 with the (omitted) Bank. Following the sale of what was for the former matrimonial home at (omitted), the (omitted) Bank retained $120,000.00, placing the money into some form of account as security against the business loan the parties had guaranteed.
Unfortunately, when relationships end they sometimes end with great bitterness. For these parties, the end of their relationship was no exception. The Court has read and heard the parties’ cross-examination and with respect to police intervention at the parties’ home; the parties accusing one another of taking and concealing items of personal property and probably the most disappointing evidence that the relationship between the husband and Ms J has broken down. The court is unsure whether that still remains the case.
Mr A currently lives with the father. The Court is not aware as to the status of the relationship between Mr A and his mother. There was argument made about the value and ownership of a coin collection during the hearing. The Court accepts the coin collection that the wife lists in the balance sheet as being worth $2000.00, in fact, belongs to Mr A. Allegations were made about the existence of a wine collection. The wife valued the same at $4000.00 in the joint balance sheet. The husband suggested he has consumed the same.
The wife gives evidence of having been diagnosed with spurs on her spine. She has difficulties in the use of her arms and has been referred to an orthopaedic specialist. The wife gives further evidence of being diagnosed with an overactive thyroid gland, and that she has nodules and goiters on that gland. The husband gives evidence, with respect to having suffered chest pain radiating into his arm sometime around 2 September 2016, at which time an ambulance was called. The husband was placed in a cardiac unit for 24 hours care after being moved to a general ward. During the course of the proceedings, the husband was given leave to adduce further evidence. It’s apparent that the husband had inserted what is best described as a stent so that blockages in his heart might be opened up so that the vessels would have a chance to feed his heart with blood.
The husband currently works, earning some $62,000.00 per year and the wife earns some $128,000 per year. The wife was upset, visibly, by the prospect she could not readily see a time when she would be able to retire.
These are proceedings governed pursuant to section 79 of the Family Law Act 1975 and in general, part VIII of the Family Law Act1975. In the case of Stanford & Stanford (2002) 293 ALR 70, the High Court, at paragraph 78 and 79, considered the manner in which the Court should approach and determine property proceedings and held.
It is necessary to begin consideration of whether is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles the existing legal equitable interests of the parties in the property.
The Court has historically determined property proceedings in accordance with its well-established principles, set out in the case of Hickey & Hickey (2003) FLC 93, at page 143, embarking upon a four-step process. The first step requires the Court to identify and value assets, liabilities and financial resources of the parties at the time of the hearing. The second step requires the Court to consider the parties’ contributions and consider any adjustment that should be made between the parties. The third step requires the Court to consider the actual circumstances of the parties and to make adjustment for those circumstances, considering a variety of factors set out at section 75(2) of the Family Law Act 1975. The last step, step four, requires the Court to satisfy itself as to the actual effect of the orders being just and equitable.
In the Full Court decision in the case of Bevan & Bevan [2013] FAM CAFC 116, the Full Court considered the decision in Stanford and the implications of that decision when looking at the four-step approach taken by the Courts. In that decision, Bryant CJ and Thackray J held, at paragraph 59:
Prior to Stanford, property applications were commonly dealt with by reference to what the trial judge called a four-step process.
This process was described at paragraphs 31 and 32 of His Honour’s reasons.
The jurisprudential basis for the process was well-established, see the lines of authority in the case cited in Hickey & Hickey. The four-step process involves the identification and evaluation of the property of the parties; identification and evaluation of the contributions to the party, including property no longer owned by the parties; identification and assessment of the various matters set out at section 75, to considerations of matters of justice and equity.
Although the four-step process has been regularly applied, the Full Court has stressed it is no more than a means to an end since the statutory obligations to order existing interests only if it just and equitable to do so. Thus, in Norman & Norman [2010] FAM CAFC 66 at [60], Finn, May and Murphy JJ said:
It is the mandatory legislative imperative to reach a conclusion that is just and equitable, that drives the ultimate result. For all its usefulness and merit as a disciplined approach or a structured process of reasoning, the three-step or four-step approach merely eliminates the path to the ultimate result. To like effect, in discussion the four-step approach in a joint judgment in Martin & Newton, we said that the approach is not legislatively mandated, and the Full Court in Hickey said it is simply the preferred approach.
This is because it will be sufficient in most cases to have regard to the overall justice and equity of the orders after determining the asset pool, consideration of contributions and assessment of the relevant section 75(2) factors. But in our view, there is no requirement that the justice and equity of orders, as prescribed by section 75(2) must only be considered at the fourth and last stage. In our view, the requirement to make an order that is just and equitable permeates the entire decision-making process, and it is not impermissible to consider it at an earlier point if the particular case requires it. We consider this such a case.
What is clear from the case law is that the four-step approach, while not legislatively mandated, continues to be adopted by the courts when determining applications under section 79 of the Family Law Act1975, for adjustment of property interests, as it is a means by which the Court is able to illuminate a pathway towards a result that is just and equitable. This approach is well-established in authorities. In that regard, see in the case of Marriage of Lee Steere (1995) FLC 91-626, and the Marriage of Ferraro (1993) FLC 92-355, in the Marriage of Clauson (1995) FLC 92-595.
In the case of Whitton & Whitton (2015) FAMCA 102, Johnson J stated:
It is our view it will be less likely that a separate issue arises under section 79. Two and four will be conflated if judges refrain from evaluating contributions and other relevant factors, in percentages of monetary terms, until such time as they firstly determined that it would be just and equitable to make an order.
This is a case where the assets of the parties are not divided evenly between them, and the Court takes the view that in this case, the Court ought to make a finding as to whether it is just and equitable to make an order when identifying, according to the ordinary common law and principles of equity, the existing legal and equitable interests of the parties. In Stanford, the High Court suggested that, in many cases, when application is made for property settlement order, the just and equitable requirement is readily satisfied by observing that, as a result of a choice made by one or both of the parties, the husband and wife are no longer living in a matrimonial relationship.
It will be just and equitable to make a property settlement order in such a case, because there is not and will not, thereafter, be a common use of property by the husband and wife. This is one of those cases. The Court finds that it is just and equitable to make a property settlement order adjusting the parties’ property interests.
During the hearing, the Court will sometimes utilise the evidence of experts, such as valuers, agreement between parties or the making of findings upon the evidence presented to identify the values of property, liabilities or financial resources. Tendered during the proceedings is a joint balance sheet, forming exhibit F.
There is a dispute as to the value of the household contents in the husband’s possession. Evidence as to the value of these items in the husband’s possession is contained within the affidavit of valuer, Mr R. There was suggestion made in these proceedings that many of the items were not in the husband’s possession. During cross-examination on the topic, the husband conceded items, such as two crystal (omitted) candelabras and a (omitted) light lamp and (omitted) painting had been given by the husband to his mother, and that some (omitted) crystal glasses were in possession of Mr A. The only evidence as to the value of items in the husband’s possession is from that of Mr R.
The Court accepts the husband has, in his possession or control, household contents of some $22,280.00. The Court considers exhibit F, and the parties’ financial statements. The Court finds the coin collection belongs to Mr A and accepts the evidence of the wine collection, or probably better described as wine purchase and thereafter consumed, no longer exists.
The Court finds the following assets:
| ASSETS | POSSESSION | VALUE |
| Proceeds - Matrimonial home – Property N | $702,324.00 | |
| Bank accounts (omitted) as security for loan guaranteed by parties | $120,000.00 | |
| Household contents | Husband | $22,280.00 |
| Household contents | Wife | $4,500.00 |
| Motor vehicle – Suzuki (omitted) | Wife | $6,000.00 |
| Motor vehicle – (omitted) Toyota | Husband | $3,000.00 |
| (omitted) shares – 1141 shares | Husband | $6,355.00 |
| (omitted) shares – 3400 units | Husband | $16,116.00 |
| (omitted) shares – 2142 units | Husband | $10,303.00 |
| (omitted) banks – ending… (omitted) | Wife | |
| (omitted) Bank | Wife | $2,587.00 |
| TOTAL ASSETS | $893,465.00 |
| ADDBACKS | POSSESSION | VALUE |
| Interim distribution received by husband and subsequently applied | Husband | $40,000.00 |
| Interim distribution received by wife and subsequently applied | Wife | $40,000.00 |
TOTAL ADDBACKS: | $80,000.00 |
| SUPERANNUATION | POSSESSION | VALUE |
| (omitted) Super | Wife | $215,588.00 |
| (omitted) Super | Husband | $1,555.00 |
| State Authorities – non-contributory scheme | Husband | $43,213.00 |
| State Authorities | Husband | $309,660.00 |
| TOTAL SUPERANNUATION | $570,016.00 |
| TOTAL NON-SUPERANNUATION POOL | $893,465.00 |
| TOTAL ADDBACKS | $80,000.00 |
| TOTAL SUPERANNUATION | $570,016.00 |
| TOTAL NET VALUE | $1,543,481.00 |
The Court notes the greater initial financial contribution made by the husband and otherwise notes the ongoing financial contributions made by the parties to the marriage with both parties working in the view of the Court to the best of their ability. The Court notes what it will describe as greater non-financial contributions in the forms of the husband’s improvement to properties owned by the parties and accepts a greater contribution having been made by the wife in her capacity as home-maker and parent.
The Court has considered there will be no effect upon the earning capacity of either party should the Court adopt either orders sought by the parties. Neither party is currently liable to pay any child support. The Court allows an adjustment for contributions as to 53 per cent to the husband and 47 per cent to the wife.
The Court notes the near on five-year age difference between the parties. Submissions were made by counsel for the husband as to the likely length of future employment for both parties. Five years is not ordinarily a large gap, but for the purposes of these parties, given the parties’ ages, it is at this time in their life and their working life somewhat significant.
The wife’s health, although not without issue, is superior to that of the husband’s health. The wife has a superior income to that of the husband, earning close on double that which the husband earns. Neither party has financial resources outside of the pool of assets found by the Court. Both parties have the physical and mental capacity for appropriate gainful employment. Neither party has the care and control of a child of the marriage not yet 18 years of age.
The Court considers the commitments of the parties to support themselves and accepts that the husband has a greater commitment to support Mr A. It would appear on the evidence neither party is eligible to receive a pension, allowance or benefit provided by state, federal or foreign government or from any superannuation scheme. The proposed orders will allow the parties a standard of living less than what they had had, but a reasonable standard of living that in all the circumstances is reasonable. The effect of the orders will allow the (omitted) bank to maintain its security and recover its funds as a potential creditor in respect of the parties’ guarantee.
The wife continued to study at the commencement of the relationship. The Court gives little weight to any argument either party contributed to the earning capacity of the other. The Court finds that neither party is cohabiting with any other person. Neither party is liable to pay child support. The Court considers the decision in Robb & Robb and gives some weight to the argument the husband has provided for Ms J during the period she lived with the parties. I again state it is a real shame the relationship between the husband and Ms J has broken down. There is no financial agreement binding upon the parties, nor a part VIIIAB financial agreement binding upon the parties.
Having considered those matters set out at section 75(2), the Court allows 55 per cent to the husband and 45 per cent to the wife based on 75(2) factors. The Court finds that an overall adjustment of 58 per cent to the husband and 42 per cent to the wife. When standing back and considering the actual effect of the orders, the Court finds it is not just and equitable to make a further adjustment between the parties and it is just equitable the Court make orders for adjustment of property between the parties. Having considered the evidence of the parties, those documents tendered during the hearing, the parties’ cross-examination, the parties’ outline of case documents and submissions made by counsel at the end of the hearing, the Court makes the following orders.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Judge Myers
Date: 8 May 2017
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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Constructive Trust
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Costs
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