Federal Circuit and Family Court of Australia
(DIVISION 1)
Medvitz & Baginski [2022] FedCFamC1F 632
File number(s): SYC 4381 of 2019 Judgment of: BRASCH J Date of judgment: 26 August 2022 Catchwords: FAMILY LAW – PROPERTY - Contributions – Where the husband was the sole carer of the child and sole homemaker for a significant period – Where the wife’s parents made significant direct financial contributions to the acquisition of properties and financial support for the family – Adjustment made in the wife’s favour.
FAMILY LAW – PROPERTY – Loan – Where the wife’s parents loaned the wife money for living expenses and legal fees post separation – Where the husband contended this was a gift or post separation liability – Where some funds had been paid back from interim property distributions - Where both parties used interim distributions received to pay for legal fees and other expenses– Where Aston & Haymon [2021] FamCAFC 146 followed.
FAMILY LAW – PROPERTY – Addbacks –Where the parties chose to addback various interim property distributions to the property pool – Where two addbacks were in dispute, including funds used for private professional supervision of the wife’s time with the child.
Legislation: Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) Pt VIII and Pt VIIIAB; ss 72, 75(2), 79(1), 79(2), 79(4), 79A 80(1)(h), 106A
Cases cited: Af Petersens and Af Petersens (1981) FLC 91-095; [1981] FamCA 50
Antmann and Antmann (1980) FLC 90-908; [1980] FamCA 64
Ascot Investments Pty Ltd v Harper & Anor (1981) 148 CLR 337; [1981] HCA 1
Aston & Haymon [2021] FamCAFC 146
Babett & Falconer (2015) FLC 98-067; [2015] FamCAFC 124
Berghan v Berghan (2017) 57 Fam LR 104; [2017] QCA 236
Biltoft and Biltoft (1995) 19 Fam LR 82; (1995) FLC 92-614
Brodie v Brodie (2009) 41 Fam LR 18; [2009] FamCAFC 6
Brown & Brown (2007) FLC 93-316; [2007] FamCA 151
Coghlan and Coghlan (2005) FLC 93-220; [2005] FamCA 429
Dickons & Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Dovgan & Dovgan [2021] FamCA 306
Gabel v Yardley (2008) FLC 93-386; [2008] FamCAFC 162
G and G (2000) FLC 93-043; [2000] FMCAfam 78
Hickey and Hickey and Attorney-General (Cth) (2003) FLC 93-143; [2003] FamCA 395
Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd and Penrith Pastoral Co Pty Ltd [1983] 3 NSWLR 378
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
Kildea v Kildea (2007) 38 Fam LR 347; [2007] FamCA 1524
Kimber and Kimber (1981) FLC 91-085; [1980] FamCA 48
Kowaliw and Kowaliw (1981) FLC 91-092; [1981] FamCA 70
Kowalski and Kowalski (1993) FLC 92-342; [1992] FamCA 54
Mallet & Mallet (1984) 156 CLR 605; [1984] HCA 21
Manolis v Manolis (No 2) [2011] FamCAFC 105
Maine & Maine (2016) 56 Fam LR 500; [2016] FamCAFC 270
Mitchell & Mitchell (1995) FLC 92-601; [1995] FamCA 32
Perrin & Perrin (No 2) [2018] FamCAFC 122
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 166
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Whisprun Pty Ltd v Dixon [2003] 234 CLR 492; [2003] HCA 48
W v W (1997) FLC 92-723; [1997] FamCA 3
Division: Division 1 First Instance Number of paragraphs: 145 Date of last submission/s: 22 July 2022 Date of hearing: 19 July 2022 – 22 July 2022 Place: Sydney Counsel for the Applicant: Ms Spain Solicitor for the Applicant: Vizzone Ruggero Twigg Lawyers Counsel for the Respondent: Mr Richardson SC, with Dr Barnett Solicitor for the Respondent: Swan Lawyers ORDERS
SYC 4381 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR MEDVITZ
Applicant
AND: MS BAGINSKI
Respondent
order made by:
BRASCH J
DATE OF ORDER:
26 August 2022
THE COURT ORDERS BY CONSENT:
1.That the applicant husband indemnify the respondent wife for all or any monies payable or costs incurred as a consequence of the failure to provide N School with a term’s notice in accordance with its contract with the parties, following the removal of the child, X, from N School at the end of Term 2, 2021.
2.That within seven (7) days of the date of these Orders, the applicant husband pay into the respondent wife’s nominated account, the sum of $1,412.50, to reflect Medicare rebates received by the husband for medical care paid for by the wife.
3.That within 21 days of the date of these Orders, the wife shall deliver to the husband, the husband’s wine collection that is presently in her possession.
THE COURT ORDERS:
4.That within seven (7) days from the date of these Orders, the parties shall do all acts, sign all documents and provide all instructions necessary to authorise and direct Swan Lawyers Solicitors of W Street, Suburb V to pay monies held in their trust account on behalf of the husband and wife, being the balance of proceeds of the sale of the property situated at Y Street, Suburb L, as follows:
(a)$21,279 to the husband’s solicitors, Vizzone Ruggero Twigg Lawyers, who shall account to the husband; and
(b)$1,576,748 to the wife’s solicitors, Swan Lawyers Solicitors, who shall account to the wife.
5.That each party shall be solely responsible for all personal liabilities including but not limited to credit card liabilities, personal loans, lines of credit and all other personal debts outstanding as at the date of these Orders.
6.That the husband and the wife hereby indemnify and/or release the other from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising, which either of them had or may have against the other for, or by reason of, or in respect of any act, cause, matter or thing.
7.That either party be at liberty to provide a copy of these Orders to any third party necessary to ensure compliance with these Orders.
8.That other than as herein provided, the husband be declared the sole legal and beneficial owner of all other items of property presently in his respective possession or control but not limited to:
(a)all property now in his possession, custody or control including but not limited to money, shares, real property, motor vehicles, furniture, furnishings and personal effects;
(b)all shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his sole name respectively; and
(c)all interests in life insurance policies and superannuation funds standing in his sole name respectively.
9.That other than as herein provided, the wife be declared the sole legal and beneficial owner of all other items of property presently in her respective possession or control but not limited to:
(a)all property now in her possession, custody or control including but not limited to money, shares, real property, motor vehicles, furniture, furnishings and personal effects;
(b)all shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in her sole name respectively; and
(c)all interests in life insurance policies and superannuation funds standing in her sole name respectively.
10.In the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, the Registrar of the Court be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
Interpretation and implementation
11.That the parties have liberty to re-list the proceedings on matters of interpretation or implementation of these Orders, on the giving of seven (7) days’ notice to the other, by email to Chambers (via …@...), copying the other party.
Costs
12.That the parties are to file any Application for Costs within 28 days of these Orders.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Medvitz & Baginski has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BRASCH J:
The trial in this matter commenced as requiring determination of both parenting and property disputes. To their great credit, the parties were able to resolve the parenting aspect, with final parenting orders made by consent on day three of the trial, being 21 July 2022. However, the parties were unable to resolve the property aspect of their dispute.
The applicant husband is Mr Medvitz, born in 1978 (“the husband”). The respondent wife is Ms Baginski, born in 1977 (“the wife”). The parties have one child, X, born in 2013 (“the child”). By virtue of the consent orders, the child will spend eight nights a fortnight with her father and six nights a fortnight with her mother. Holidays and special days will be equally shared.
The husband sought property orders that would see the assets and liabilities within the balance sheet (as contended for by him), being adjusted 51 per cent in his favour. The wife sought between 65-72 per cent in her favour depending on the composition of the balance sheet. The 65 per cent came from her “Schedule of outcome of Wife’s position”, received as an aide de memoire.
BACKGROUND
The wife was born in 1977, and the husband was born in 1978.
The parties commenced cohabitation in or around late 2005 in an apartment in Suburb AA, Melbourne, which they rented from the wife’s brother, Mr B Baginski. The wife subsequently bought this property in her sole name, by way of a written loan agreement with a maternal family entity for almost $844,000. BB Pty Ltd, the entity, caused a caveat to be lodged over the property to secure the loan. The wife repaid that loan in full when Suburb AA was sold in 2014. This was accepted by the husband in cross-examination.
Not long after the start of cohabitation, the husband joined the hospitality industry. By late 2006, the husband was engaged as a business manager for a hospitality entity, called CC Company, created by the wife’s father, Mr DD (“Mr DD”). The husband was paid a salary of $65,000 from that entity and was provided with Motor Vehicle 1. CC Company paid for the husband’s 457 Visa.
Despite painting a picture of profitability in his trial affidavit, for example at paragraph 311 describing the company’s “growth, demand and profitability”, the husband eventually conceded that the business, under his stewardship, only turned a modest profit in one year. Rather, as he said, inter alia, in a contemporaneous email to Mr DD in September 2013, “…Now [CC Company] is no longer sustainable and I don’t want you to waste precious money for a business that has no more future. I feel responsible for this negative outcome and one they [sic] I’ll repay you back. It is not fair for you” (husband’s email extracted in Mr DD’s affidavit filed 30 June 2022, paragraph 66) (as per original).
The parties married in 2010. Mr DD deposed that he paid $150,000 for the parties’ wedding in Europe. Not long after their marriage, the husband and wife thereafter left the Suburb AA property and moved to Sydney. They rented an apartment in Suburb R until 2014 and leased out the Suburb AA property.
The wife accepted in cross-examination that between 2005 and the child’s birth in 2013, her parents gifted her $500 per week, and then $1,000 per week from the child’s birth. These payments continued being made to the wife until approximately mid-2016 (Wife’s affidavit filed 28 June 2022, paragraph 412). In addition, the husband did not dispute that the wife’s parents provided approximately $50,000 for IVF treatment prior to the child’s birth. Nor did he dispute that the wife’s parents funded holidays for the family, estimated by Mr DD to be in the vicinity of $150,000.
In late 2013, the wife recommenced part-time employment. The parties engaged au pairs and nannies from about this time to April 2016. On or about late 2013, Mr DD sold the CC Company business in which the husband had been working. The husband retained Motor Vehicle 1. Apart from a short period of unemployment after a redundancy in early 2020, the husband maintained employment in the same industry with entities unrelated to the maternal family.
In early 2014, the wife’s parents provided the parties with approximately $1.7 million to purchase a property at Suburb K. There was no expectation that this would be repaid, and was not. This gift and quantum was accepted by the husband in cross-examination.
It was common ground that in early 2015, the wife’s mental health began to deteriorate, resulting in some overnight hospitalisations and placements at mental health clinics. During this time, the husband had the primary care of the child, albeit with a daytime, part time nanny.
On 22 April 2016, the parties separated when the wife vacated the matrimonial home in Suburb K and moved to live with her parents at Suburb EE, Victoria. The child remained with the husband.
Ultimately, the child did not spend any time with her mother from April 2016 to the making of court orders on 5 December 2019. During this time, the wife initially lived with her parents, and then spent three months in Europe, 18 months in Country FF and six months in Country GG. The child lived with her father, who had the assistance of nannies for about 12 hours a week.
From April 2016 to January 2019, the husband deposed that the wife’s parents provided him with $1,000 a fortnight for the child’s expenses (Husband’s affidavit filed 30 June 2022, paragraph 50). The wife’s parents also paid for her private school fees.
In mid-2017, being post-separation, the husband sold the Suburb K property for $2,450,000 and with the proceeds, acquired two properties in joint names, one at Suburb L for $1,725,000 and an investment property at Suburb HH for $380,000. He also expended approximately $137,000 on renovations to the Suburb L property. The parties are in dispute about how the rental from Suburb HH was applied (or not) to the wife’s support. The wife also said that some $100,000 from the sale of Suburb K remained unaccounted. That is not a dispute I can resolve.
In 2017, the husband and the child moved to Suburb L.
On 5 July 2019, the husband commenced proceedings in the Federal Circuit Court, as it then was. This coincided with the date from which Mr DD commenced a ledger of monies owed that he provided to the wife. A copy of this ledger is annexed to both the wife’s affidavit, at page 349, and Mr DD’s affidavit at page 54 (“the ledger of monies owed”). Whether those advances constituted a gift or a liability to be visited upon the balance sheet is an issue in dispute.
In late 2019, the wife returned to Sydney.
On 5 December 2019, orders were made for the child to spend supervised time with her mother. The supervisors were to be either F Centre, the wife’s parents (but they lived in Victoria), or such other person as agreed between the parties in writing. The wife nominated other people, but the husband did not agree. It is in dispute whether the costs of F Centre be included in the balance sheet, or not. The wife paid the costs from an interim property distribution and sought to take the fees off that sum. The husband resisted that.
The parties received interim property distributions from the sale of the Suburb HH and Suburb L properties. One of the distributions made to the wife in the sum of $60,224 is in dispute. The wife submitted it be excluded from the pool, but the husband said it ought to be added back.
After the orders of 5 December 2019, the child’s time with her mother graduated from supervised daytime time, to supervised overnight time, then to unsupervised time, half-holidays and special occasions, culminating in an interim order of April 2022 whereby the child would spend five nights a fortnight with her mother and the balance with her father.
In mid-2021, the wife moved into a rental property in Suburb L; she said this was to be closer to the child. However, shortly after, the husband advised that he and the child would leave Suburb L and move to Suburb J, which he did in or about mid-2021. Nevertheless, the wife had access to a property of her parents at Suburb C, which she was able to use.
EVIDENCE and witnesses
The applicant husband relied upon the following documents:
·Further Amended Initiating Application filed 18 March 2022;
·Financial Statement of Mr Medvitz filed 14 July 2022;
·Affidavit of Mr Medvitz filed 29 June 2022;
·Outline of Case Document filed 14 July 2022; and
·Husband’s Exhibits 1 and 2.
The respondent wife relied upon the following documents:
·Amended Response to Initiating Application filed 13 July 2022;
·Affidavit of Ms Baginski filed 28 June 2022;
·Affidavit of Mr DD filed 28 June 2022;
·Updated Financial Statement of Ms Baginski filed 13 July 2022;
·Outline of Case Document filed 13 July 2022; and
·Wife’s Exhibits 1 to 6, but one exhibit, was subsequently removed from the exhibit’s list and returned to the wife’s lawyers, given it turned out to be incomplete and already in evidence.
Both parties and Mr DD were cross-examined. The Single Expert was also cross-examined but, the parenting proceedings were finalised by way of a consent order.
The standard of proof is the balance of probabilities. Section 140 of the Evidence Act 1995 (Cth) provides:
(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject- matter of the proceeding; and
(c) the gravity of the matters alleged.
It is well settled that it is not necessary for a trial judge, in reaching a decision, to refer to every piece of evidence or argument presented during the trial. In Whisprun Pty Ltd v Dixon [2003] 234 CLR 492, Gleeson CJ, McHugh and Gummow JJ said at [62]:
…A judge's reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge's failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party's case.
In Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd and Penrith Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 385–386, Mahoney JA said this:
It is not the duty of the judge to decide every matter which is raised in argument.
…
Nor is it necessary for a judge who is exercising a discretionary judgment to detail each factor which he has found to be relevant or irrelevant, or to itemize, for example, in the assessment of damages for tort, each of the factual matters to which he has had regard … Nor is a judge required to make an explicit finding on each disputed piece of evidence. It will be sufficient, if the inference as to what is found is appropriately clear…
ISSUES
The following issues required determination:
·Whether two addbacks ought be excluded or included in the balance sheet:
·$60,244 being an interim distribution to the wife from the sale proceeds of the Suburb HH investment property. The husband contended it be included in the balance sheet, but the wife contended it be excluded;
·$46,768 being the costs of the F Centre professional supervision of and report about the child’s time with her mother. The husband was resolute in declaring the responsibility for these costs was solely the wife’s and it thus should be excluded from the balance sheet. Conversely, the wife contended it be included in the balance sheet as a shared responsibility, and effectively took it “off the top” of another interim distribution she had received;
·Whether monies advanced by Mr DD to the wife, of $209,272, were a gift or a loan, and if a loan, whether it ought be included in the balance sheet as contended for by the wife, or excluded as the husband contended;
·What adjustment ought be made for the parties many and varied contributions; and
·What adjustment ought be made, if any, for the relevant s 75(2) factors.
Legal principles
Section 79 of the Act provides:
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
…
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
…
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
In exercising that discretion, the court is required to take into account the matters set out in
s 79(4) of the Family Law Act 1975 (Cth)(“the Act”), as follows:
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The High Court in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”), at [35] confirmed that before an order is made adjusting the parties’ property, the court is required to make a determination that it is just and equitable to do so. The determination that is to be made however not as a discrete or preliminary issue, but requires the court to consider the matters set out in s 79(4) of the Act.
In Hickey and Hickey and Attorney-General (Cth) (2003) FLC 93-143 (“Hickey”), the Full Court held at [39] that, in considering the matters set out in s 79(4) of the Act the preferred approach was to adhere to the following four steps:
(a) Identify and determine the value of the asset pool of the parties as at the date of the hearing (this necessarily involves identifying both the assets and liabilities);
(b) Identify and assess each of the parties’ financial and other contributions up until the date of the hearing (this can include the financial contributions made before, during and after the marriage);
(c) Assess how future and other events may have a financial impact on either of the parties, such as their age and state of health and their income and property or financial resources (known as the s 75(2) factors); and
(d) Step back and examine this formula-based reasoning against the history of the marriage, intangible considerations and other contingencies so as to consider whether the outcome represents a just and equitable result.
That approach has been endorsed many times: see, for example, Manolis v Manolis (No 2) [2011] FamCAFC 105; Kildea v Kildea (2007) 38 Fam LR 347; Coghlan and Coghlan (2005) FLC 93-220. Further, the Full Court in Perrin & Perrin (No 2) [2018] FamCAFC 122 cited at [57]–[58] with approval, the decision in Babett & Falconer (2015) FLC 98-067 at [44]:
Within the family law context, … the nature of the s 79 inquiry is, in essence, a broad discretionary assessment, which is neither an accounting nor mathematical exercise and which, effectively as a corollary, requires a "broad-brush approach".
(Citations omitted)
Is it just and equitable to make a property adjustment?
In Stanford, supra at [42], the High Court said this:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital 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 the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
In this matter, with:
(a)the breakdown of the parties’ relationship and them now living apart;
(b)their undisputed joint ownership of the single largest item of value on the balance sheet (Item 1: Suburb L proceeds);
(c)their myriad of contributions over many years which I subsequently set out; and
(d)The concession of each party that there be a property adjustment;
I find the husband and wife comfortably satisfy the requirements in Stanford, and that it is thus just and equitable to make a property adjustment order.
The balance sheet (Court’s Exhibit 4)
The parties tendered a joint balance sheet, which was marked Court’s Exhibit 4. I have already noted the pool items in dispute under the heading of “Issues” above. I will deal with each disputed item in turn.
In this matter, the husband contended that all distributions be added back to the balance sheet, whilst the wife said one ought not be added back at all (the $60,244), and another ought be reduced by the costs of supervised time. This approach of adding-back was despite decisions such as Trevi & Trevi (2018) FLC 93-858 (“Trevi”) (and the many authorities pre-dating it), which indicate addbacks are the exception not the rule, and that the appropriate course may be to consider such distributions as a s 75(2)(o) factor.
Although I did ask Senior Counsel and Counsel for the parties about the s 75(2)(o) course, “which is, perhaps, technically more correct” (see Trevi at [30]), I ultimately formed the view that I would not deviate from the approach by which the parties had chosen to agree on many addbacks. However, that did not detract from the fact that two individual addbacks remained in dispute.
Item 18: “Interim distribution of Balance of [Suburb HH] to be determined by the Trial Judge” - $60,244
The wife deposed:
The balance of the proceeds of sale of $60,224.47 were paid to me on 3 December 2020 as set out in paragraph 470 below. I applied these funds to pay my rent, my living expenses and credit card debts which I had incurred.
…
On or about 3 December 2020, I received a further $60,224.47 which funds were held in trust by [JJ Solicitors]. On 24 November 2020, Order 23 made states, ''That within three business days of the date of Order, the parties do all acts and things necessary, including signing all documents, to release to the Wife the sum of $60,224.47 from [JJ Solicitors] by way of lump sum spousal maintenance [or interim] or partial properly settlement."
I had made an application for spousal maintenance as at that time, l could not work due to the outbreak of COVID-19. I was paying rent in [Suburb R] and wanted to rent in [Suburb L] to be closer to [the child]. l had no rental history and required a lump sum to secure a property.
(Wife’s affidavit filed 28 June 2022, paragraphs 437, 470 and 471)
With respect to the quoting of the order, the additional words in square brackets add “or interim” to reflect what the order actually said.
The husband’s position was that the $60,244 be added back to the pool in its entirety. It was submitted that there was no evidence from which I could conclude that the wife could not adequately support herself at the time of the distribution in December 2020 so as to warrant it being considered spouse maintenance. Rather, it was submitted I would consider it to be interim property and add it back.
The wife’s position was, essentially, that she needed financial support and had been thwarted by the husband in receiving all or part of the rental receipts from the parties’ investment property at Suburb HH, other than some sporadic transfers. The wife took the view that I need not consider whether it was lump sum spouse maintenance but instead that it was “reasonable expenditure in her day-to-day living” (Transcript 22 July 2022, p.20 line 9). Further, it was submitted:
That that be taken into account as an amount that would have been most reasonably contributed towards her day-to-day support in circumstances where, from that point moving forward until the sale of the [Suburb L] property, the husband had the opportunity, and did, live with the parties’ child in the [Suburb L] property that was unencumbered and had the benefit of an income himself of over $100,000 per annum, and had some financial assistance in relation to [the child]. So there’s not an exactitude of science about the figure. It’s a question of the broad rubric of what might be a just and equitable approach.
(Transcript 22 July 2022, p.17 lines 35-43)
I will discard the spouse maintenance head of power, because the husband resisted that approach and the wife said such consideration was unnecessary. I also do so because I have scant evidence, if any, to conduct even the most rudimentary analysis of the wife’s reasonable needs, and more so, the husband’s capacity to meet any such need at that time (see s 72 of the Act and see also Mitchell & Mitchell (1995) FLC 92-601; Brown & Brown (2007) FLC 93-316).
The 24 November 2020 consent order also referred to “interim or partial property settlement”. Past authorities have made reference to property adjustment orders which are “interim”, “partial”, and “final”. Nowhere in the Act does the word “partial” appear in the context of orders for settlement of property. Reference to “partial” orders for settlement of property may now be seen as less than helpful (see Gabel v Yardley (2008) FLC 93-386 (“Gabel v Yardley”) at 82,955). “Interim” orders for settlement of property are expressly referred to in the Act (see s 79(6)) and also envisaged by the Act (see s 80(1)(h), and see also Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”) at [114]). I will use the adjective “interim”, but that is within a wider requirement that the orders I make, must ultimately be just and equitable as between the parties (see Gabel v Yardley, supra, at 82,960).
I will not addback the $60,224 for the following reasons. First, I accept that in November 2020 when the consent order was made, and then in December 2020 when the wife received the funds, the wife earned little income, but nevertheless had living expenses. The reality of living expenses is just a matter of common sense. The wife deposed at paragraph 380 of the wife’s affidavit filed 28 June 2022, that in late 2020 she ceased working in administration because her employer returned to Country KK; she earned approximately $2,000 per month from that endeavour. I do not know if that was gross or net of tax, but whatever the sum, it was modest, equating to about $462 per week and obviously less in the hand if that figure was before tax. The wife then commenced casual work, but I have no evidence what she earned from that. There was no suggestion from the husband that it was anything of significance.
In those financial circumstances, there is nothing exceptional to warrant an addback (Trevi at [30]) about the wife using joint matrimonial funds to which she had just as much entitlement as the husband, to enable her, as outlined in paragraph 471 of the wife’s affidavit filed 28 June 2022, “to rent in [Suburb L] to be closer to the child. I had no rental history and required a lump sum to secure a property”. Quite sensibly, the wife was not challenged about the reasonableness of this in cross-examination.
Second, the wife submitted that prior to the sale of the matrimonial investment property at Suburb HH in early 2020, she ought have received the rental income from Suburb HH (or at least some of it), but she said the husband thwarted her access to that rather obvious income stream. Having heard the husband’s cross-examination, I accept that to be so. In cross-examination, the husband agreed he did not sign the documentation for the agent to facilitate the wife receiving a regular income stream from this matrimonial investment property prior to its sale. The husband also agreed any funds received by the wife from Suburb HH were “irregular” and that he did not facilitate the agent paying the net rental income to the wife because he was “short every month”. That of course had no regard to the wife’s financial needs, including the paying of rent and obviously the wife’s own living costs. The husband confirmed in cross-examination that he had not even countenanced paying her 50 per cent of the net and himself the other 50 per cent. In the meantime, until Suburb L was sold in late 2021, the husband lived in that unencumbered property and had the benefit of an income of over $100,000 per annum. He had previously had the benefit of financial assistance from the maternal grandparents. In those premises, I again do not consider the use of the joint funds to be exceptional, and nor do I consider it would be just and equitable to add them back.
Item 20: Interim distribution of Suburb L Property proceeds of sale – whether off set by F Centre costs
Both parties received interim distributions from the Suburb L property sale proceeds in the amount of $1,033,735 each.
I have already referred to the legal metes and measures with respect to interim distributions.
Of this distribution to the wife, the wife sought to subtract the costs of the F Centre professional supervision and reports. She stressed the real beneficiary of the order for supervision was the parties’ child, who was able to be introduced back to her mother after a considerable absence.
The husband steadfastly opposed this, saying these costs ought be the wife’s, and the wife’s alone. He highlighted that the need for supervision was a consequence of the wife’s actions (or perhaps inactions) and firmly rejected looking at the matter from the perspective that this supervision was of benefit to the parties’ child.
On 5 December 2019, orders were made for the child to commence spending supervised time with the wife, through F Centre, the wife’s parents (who lived in Victoria) or such other person as agreed. It was the father’s evidence in cross-examination that whilst the wife had identified other suggested supervisors he had not agreed to supervision by anyone other than F Centre.
On 17 April 2020, the child commenced spending supervised, overnight time with her mother. In January 2021, the child’s time with her mother progressed to being unsupervised.
The wife paid $46,768 (rounded up and including GST) for these supervised visits with F Centre from the interim distribution received from the proceeds of the Suburb L property. Neither the quantum of the costs nor the source of payment were in issue.
I accede to the wife’s position on this issue. I do so because the $46,768 was sourced from joint matrimonial funds, and used to facilitate the child developing a meaningful relationship with both parents, and critically in the circumstances of this case, her mother. I conclude that the real beneficiary of these payments was the parties’ child. I do not consider it ‘exceptional’ to use joint funds for the ultimate benefit of the parties’ child.
Item 24: Monies owed to Mr DD
Between July 2019 and February 2022 the ledger of monies owed (as set out in annexures to both the wife’s trial affidavit and that of her father), indicated Mr DD had advanced a total of $459,272 to his daughter, the wife herein. It was common ground that $250,000 had been repaid by the wife from interim distributions made to her, leaving a balance at time of trial of $209,272.
The wife contended that sum ought be included as a liability in the balance sheet, or in the alternate, as a s 75(2)(o) consideration. The husband resisted its inclusion in the pool.
Mr DD deposed as follows:
Prior to [Ms Baginski] returning to Australia in September 2019, I had a conversation with her during which I said: “Your mother and I will support you financially until this matter ends. We will advance you money and you can then repay it from the property settlement when it is finalised.”
Between July 2019 and February 2022, [Ms LL] and I provided a loan to [Ms Baginski] for her living expenses, legal fees, rent, storage fees and supervision costs. The total funds lent to [Ms Baginski] exceeded $309.272. A copy of the spreadsheet recording the loan is annexed marked [“DD11”].
[Ms Baginski] repaid us $150,000 from the proceeds of the sale of the property situated at [MM Street, Suburb HH] in the state of Victoria (“the [Suburb HH] property”) which was purchased by [Mr Medvitz] under a power of attorney held by him on her behalf.
On 15 February 2022, she repaid us a further $100,000 following the distribution of funds following the settlement of the [Suburb L] property.
(Affidavit of [Mr DD] filed 28 June 2022, paragraphs 99-102).
The wife deposed in similar terms, saying: “I am required to repay to my parents the funds owed upon a final property settlement” (Affidavit of the wife filed 28 June 2022, paragraph 492).
In cross-examination, the wife was asked whether there had been a conversation with her father, Mr DD, in relation to repayment of any of the monies owed to him. The wife’s answer was “I remember having the conversation. I don’t remember when it was exactly” (Transcript 21 July 2022, p.40 line 23-24). In cross-examination, Mr DD confirmed that he expected to be repaid the funds as per the ledger of monies owed.
The ledger of monies owed broke down payments by month and by use, and then gave the following totals for each expenditure type:
Legal Fees Experts/Property Supervision Rent/storage Living/misc. TOTAL $237,994 $28,419 $45,474 $48,750 $98,635 Expense total: $459,272 Less Repayments $150,000 Balance owning $309,272
It was common ground that $100,000 was repaid in February 2022, leaving a revised total of $209,272. However, how that payment of $100,000 ought be apportioned across the categories was not clear. Indeed, as the husband highlighted:
[Ms Baginski] in the witness box could not tell the court, for example, how much of the two hundred and odd thirty thousand dollars that her father had loaned in respect to legal costs is represented by the $209,000 that sits on the balance sheet.
(Transcript 22 July 2022, p.3 lines 22-25).
The husband opposed the inclusion of this $209,272 in the balance sheet, submitting the amount ought be categorised as a gift, or “even if it was a loan, the money went towards post-separation expenses” (Transcript 22 July 2022, p.3 lines 19-20). On Mr DD’s ledger of monies owed, it is clear that the monies did indeed go to post-separation expenses including legal fees, but I pause to observe that the parties by their agreed addbacks are also adding back significant sums of monies that have also been used for post-separation expenses, including legal fees (see Husband’s Cost Notice, marked Husband’s Exhibit 2; and Wife’s Cost Notice, marked Wife’s Exhibit 5).
It was also submitted for the husband that there were inconsistencies between the evidence of Mr DD and the wife about how the agreement was struck and that the wife was “uncertain” and “very vague” in the witness box about the categories of uses and how she had applied the funds. It was also said that the loan was not in writing; had no repayment terms and no security had been provided. These points were contrasted with the written loan agreement enabling the purchase of the Suburb AA property, along with the provision of security by way of a caveat. It was then submitted that it would be artificial to call the money a loan, in circumstances where the wife’s parents had long provided financial support to the parties when together, and to the husband, for the child, when the wife was absent.
It was the wife’s position that this liability ought be included in the balance sheet. It was submitted that the agreement between the wife and her father did not need to be reduced to writing but rather there was an oral agreement and the spreadsheet represented the recording of the transactions and purposes. It was highlighted that, critically, repayments had been made, and made from interim distributions which were included on the balance sheet by agreement. Further, it was submitted that neither the wife nor Mr DD were challenged upon propositions such as, there was no agreement, and, there was no intention by Mr DD to pursue the monies.
When asked whether including that part of the liability which related to legal fees would have the effect of the husband subsidising the wife’s legal fees, Counsel for the husband said yes. Conversely, Senior Counsel for the wife submitted that I ought “look at the matter in a different direction” (Transcript 22 July 2022, p.15 line 12).
…The husband would put it, addback the totality of everything that has been distributed in the meantime. Now, therefore, it didn’t become necessary to consider within that picture where legal costs discretely sat, but we certainly know there has been substantial legal costs on each side.
But in terms of any injustice that would arise from the legal costs factor of taking into account this liability, in broad terms – and what I mean by that is the disparity of $13,000 – any glaring injustice from the legal costs aspect is cured by the fact that there has been a repayment of $250,000 already from funds that are totally added back within the course of the proceeding, that is, from [monies] that are included in the conceded addback [sic] amount. So if we start at the distribution of the 150, the distribution of the 900-odd thousand dollars, that’s what has already funded the repayment of 250. And to that extent, in our submission, it can be seen that there would be no injustice arising from that aspect as a matter of discrete consideration…
(Transcript 22 July 2022, p.15 lines 16-29)
The $13,000 disparity arose if, in very rough mathematics, the $250,000 in repayments was set off against what had been paid for legal fees in the schedule: almost $239,000. There was no evidence before me that that was how the wife and her father intended to attribute the repayments; indeed, the husband highlighted that the wife really had no idea how much of the remaining $209,272 related to legal fees. But I did not understand Mr Richardson’s submissions to be suggesting that as an actual apportionment either. Rather, I understood the submission to concern how the parties were approaching post-separation expenses and legal fees met from other funds, and, that it would be just and equitable to add this liability to the balance sheet, for the same reasons.
The first question that arises is whether the sum is a loan or a gift. I conclude that it is a loan for a number of reasons. For a start, two significant repayments have been made; gifts by their nature are not paid back. Next, the absence of formal documentation for this loan is not fatal, see Berghan v Berghan (2017) 57 Fam LR 104. I accept the evidence of both the wife and her father that they struck an oral agreement that the monies were a loan and that the balance of monies are to be repaid. Then, I do not consider the wife’s evidence and that of her father was fatally conflicted: they both spoke of a conversation and both spoke of the need for repayment. I accept the wife was uncertain about the application of monies, but I also accept that she relied upon the ledger kept by her father.
Mr DD is nevertheless an unsecured creditor (see Biltoft and Biltoft (1995) FLC 92-614 (“Biltoft”)). The next question then is, whether it is a loan “that is vague or uncertain, if it is unlikely to be enforced or if it was unreasonably incurred”; see Biltoft at 82,127:
Notwithstanding the general practice which has developed [in the extract immediately preceding], the Court has indicated that it may properly determine not to take into account or to discount the value of an unsecured liability in certain circumstances. Such liabilities would include but are not limited to a liability which is vague or uncertain, if it is unlikely to be enforced or if it was unreasonably incurred.
(Emphasis added)
Whilst there is uncertainty about how the recent payment of $100,000 ought be apportioned across the categories of use, the bottom line figure is clear and the quantum is agreed (albeit not whether it be included or excluded in the balance sheet). Similarly, whilst the wife was vague and uncertain in the witness box about how sums had been applied, there was nothing vague or uncertain about the quantum in dispute. I accept the evidence of Mr DD and the wife, that the loan is to be repaid. There was neither challenge nor submission made, which was appropriate in the circumstance, that the sum was unreasonably incurred. I conclude that it was not.
A Court may also take the view that because of the circumstances surrounding the incurring of a liability, it ought, in justice and equity, be wholly or partly disregarded in determining the appropriate order to make under s 79 of the Act as between the parties to the marriage. Such a result could be reached where a spouse had incurred a liability in deliberate or reckless disregard of the other party’s potential entitlement under s 79 (Kimber and Kimber (1981) FLC 91-085; Kowaliw and Kowaliw (1981) FLC 91-092; Antmann and Antmann (1980) FLC 90-908; Af Petersens and Af Petersens (1981) FLC 91-095).
There was no suggestion here that the wife borrowing from her family for the purposes described was in any way a “deliberate or reckless disregard of the other party’s potential entitlement under s 79”. I was not asked to make such a finding and will not.
I now turn to the whether, in the circumstances of the matter, I ought include the whole amount of the loan, some lesser amount or nothing at all. The problem with the middle proposition (some lesser amount) is that the parties ran their cases that either the sum was all in, or all out. I will follow the approach which they have taken. To do something else (that is, some lesser amount) would require me to create some arbitrary approach contrary to the parties’ positions on this matter and submissions made. I will not do that. I am thus left with the parties’ all or nothing contentions.
I am acutely aware that post separation legal fees and loans for legal fees would not usually be included in a property pool for the s 117 reasons summarised by Tree J below. But that is not how the parties have approached their proceedings with agreed addbacks being included in the pool, that had legal fees and post separation expenses (see Husband’s Exhibit 2 and Wife’s Exhibit 5). As also said, I do not know how much of the remaining $209,272 loan is referable to legal fees.
To that end, in Aston & Haymon [2021] FamCAFC 146 (“Aston”), per Tree J for the Full Court as it then was, Ground 1 of appeal, at [9] was:
[The primary judge] erred by accepting evidence that the post-separation loans made to the respondent and included these loans in their entirety into the property pool despite the stated purpose for some of these loans being for payment of legal expenses, fines and penalties and court ordered costs.
Justice Tree gave context to this ground at [10], quoting the first instance decision of the primary judge’s reasons at [28]. I pause to note the ground of appeal did not concern the $200,000 loaned during the relationship, but the $177,800 loaned post-separation:
The husband asserts that there are loans from his parents which need to be included in the matrimonial pool. There is an amount of $200,000 which he says was loaned during the marriage. There is an amount of $177,800 when he says was loaned post-separation. The husband’s father deposed in an affidavit filed 3 May 2019 to loans paid at those times. He was not cross-examined about any of these matters although he was required for cross-examination. The fact that he alone deposed to matters which his wife may also have been able to speak to does not lessen his own evidence. His evidence about matters to do with loans and gifts is unchallenged and must be accepted by the Court. I accept the loans are real and must be included in the pool. Any amounts within the loans which were for legal fees or expenses should not be included in the pool, but I am unable to tell from the husband’s father’s evidence which amounts are strictly legal costs and so the amounts in their entirety will need to go in.
Justice Tree then observed at [15]:
It is often accepted that legal fees attributable to the property proceedings should not be included as liabilities in determining the net property pool, given that to do so would see the other party bearing some responsibility for them, contrary to the usual rule established under s 117 of the Act. Logically, the same reasoning would apply to loans used to pay such bills.
His Honour concluded, relevantly, that it was not incumbent upon the primary judge to speculate on how much of those fees were referable to the property proceedings, nor to arbitrarily apportion them. Ground 1 failed. I find myself in the same position as the trial judge in Aston, supra; I do not know how much of the $209,272 is attributable to these proceedings.
That said, this is a matter where the parties are already placing their respective legal fees into the pool by adding-back distributions. They have obviously used the funds for some living as well, because the quantum of addbacks are not solely attributable to legal fees, as their Costs Notices make clear. The $250,000 repayment to Mr DD also finds its way into the pool as part of an addback for the wife. I accept the submission by Senior Counsel for the wife that justice and equity requires I take the same approach to the loan from the wife’s father. I agree. In circumstances where the parties are adding back post separation distributions used for post separation expenses, I will do the same for this sum of $209,272. I pause to observe I have taken a different approach to the $60,244, and have set out my reasons for that discrete dispute above.
In the alternate, I could have considered the $209,272 as a s 75(2)(o) factor, being money that is owed by the wife, but that would be an act of imprecision to assign a per cent (as part of the wider s 75 consideration) for something that is tangible, quantified and real.
Looking at the $209,272, I will however deduct the sum of $45,474, which Mr DD listed (at that amount) for supervision; I have already dealt with that matter under Item 20. To include it as part of this liability, at Item 24, and also deduct it out of Item 20 would be to double dip. I will therefore include $163,798 as a liability in the balance sheet.
The balance sheet
Taking account of the agreed items and/or values, and, for the reasons given above with respect to the disputed items and/or values, I find the parties assets, liabilities and financial resources to be as follows:
ASSETS Ownership Description Agreed value 1. Joint Sale proceeds from Suburb L (held in Trust) $1,598,027 2. Husband Motor Vehicle 2 $8,000 3. Husband Motor Vehicle 3 $7,000 4. Husband Recreational vehicles $2,500 5. Wife Motor Vehicle 4 $8,000 6. Husband Westpac eSaver Account …38 $1,550 7. Husband Westpac eSaver Account …07 $106 8. Husband Westpac Choice Account …40 $1,108 9. Husband Westpac Choice Account …81 $48 10. Wife Westpac Choice Basic Account …88 $395 11. Wife Silver Bullion $0 12. Wife Gold Bullion $0 13. Wife Personal effects $5,000 14. Husband Household contents $5,000 15. Husband Wine $3,000 Total $1,639,734 ADDBACKS 16. Husband Interim distribution of Suburb HH Property proceeds of sale $150,000 17. Wife Interim distribution of Suburb HH Property proceeds of sale $150,000 18. Wife Interim distribution of Balance of Suburb HH ($60,244) $0 19. Husband Interim distribution of Suburb L Property proceeds of sale $1,033,735 20. Wife Interim distribution of Suburb L Property proceeds of sale ($1,033,735, less $46,768) $986,967 Total $2,320,702 LIABILITIES 21. Husband Westpac Mastercard Account …50 $0 22. Husband Westpac Card Account …64 $4,927 23. Wife Westpac Card Account …21 $519 24. Wife Monies owed to Mr DD
$209,272 less the sum for supervision in Mr DD’s ledger of monies owed of $45,474$163,798 Total $169,244 SUPERANNUATION Member Name of Fund Type of Interest Value 25. Husband Superannuation Fund 1 Accumulated $151,566 26. Wife Superannuation Fund 2 Accumulated $0 Total $151,566 NETT TOTAL ASSETS (including Superannuation) $3,942,758
FINANCIAL RESOURCES Member Description Value 27. Wife Beneficiary of the Baginski Family Trust $0 28. Wife Beneficiary of the Baginski Family Trust No. 2 $0 29. Wife Beneficiary of the LL Family Trust $0 Total $0 Contributions
The court is required to make an assessment of the nature and quality of the totality of the parties’ contributions throughout the entirety of their relationship, together with their contributions in the period subsequent to their separation. (See for example: Dickons & Dickons (2012) 50 Fam LR 244; Jabour & Jabour (2019) FLC 93-898. In Dovgan & Dovgan [2021] FamCA 306, (Harper J) restated the need to holistically assess contributions, and that “all contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder” at [347].
Once a marriage dissolves and the parties’ rights and entitlements under Part VIII (or Part VIIIAB) of the Act fall to be determined, all of their financial and non-financial contributions pertaining to the relationship – whether made before, during or after it – are intrinsic to the discretionary relief granted. That is because their rights are premised upon the existence of the marriage regardless of when their property was acquired (see Kowalski and Kowalski (1993) FLC 92-342 at 79,630-79,631; W v W (1997) FLC 92-723 at 83,769-83,771; G and G (2000) FLC 93-043 at 87,673-87,674; Maine & Maine (2016) 56 Fam LR 500 at [21]).
Whilst I use traditional, temporal contribution headings below, I do so simply to assist in identifying the myriad of contributions made by the parties. I then assess all contributions holistically.
Initial contributions
The wife had assets at the start of the relationship of a greater value than the husband, but it was agreed that nothing turned on that. I accept that to be so.
Contributions during the course of the parties’ relationship and thereafter
Given the considerable period of time post-separation and that the parties acquired properties in joint names in the post-separation period, it is useful to consider these two periods (during and post separation) together.
It was the husband’s position that:
(e)I would lead myself into error if I placed too much emphasis on the direct financial contributions provided by the wife’s parents. I accept that is so; it is but one of a myriad of contributions that I must consider;
(f)The approach I must take to contributions is a holistic one. Plainly, that is so. I also accept it is the case that homemaker contributions must be assessed, not in a token way, but in terms of its true worth to the building up of the assets. (Mallet & Mallet (1984) 156 CLR 605 at 636);
(g)The Suburb AA property was a contribution by the wife. The husband accepted in cross-examination that the wife’s parents paid “every dollar” for this acquisition, and that he and the wife paid “not one dollar” (Transcript 21 July 2022, p.26 line 24). I accept his evidence as it is consistent with other evidence. I say more about Suburb AA later in these reasons;
(h)That the increased values upon the sales of the Suburb AA, Suburb K and Suburb L properties were the products of market forces. I accept that to be so, having no evidentiary basis to find otherwise, nor did either party contend I do. Renovations were undertaken by the husband to Suburb L, but he used matrimonial funds for that and I have no evidence about how those renovations may have impacted upon the ultimate value of the property on sale;
(i)There was however, a “straight line” between the wife’s parents funding the acquisition of the Suburb AA property to the Suburb K property and then to the Suburb HH investment property and the Suburb L property. The husband accepted that the purchase of Suburb K was the “springboard” to the parties’ current wealth. I also say more about this later;
(j)The husband had paid the outgoings for the properties. I accept that to be so;
(k)He transferred the wife money when she was overseas, sourced from “…net rental income from [Suburb HH] and part were his own salary” (Transcript 22 July 2022, p.6 lines 20-21). However, the transfers that the wife were taken to were modest, and, in so far as net rental income was used, Counsel for the husband (rightly) accepted that these were matrimonial funds to which the wife had an entitlement. I agree;
(l)His income (and I assume his corresponding ability to contribute) had increased from about $30,000 at the start of the relationship to $120,000, but I have little evidence to indicate how he contributed to the acquisition, maintenance and conservation of properties from that income other than the payment of property outgoings;
(m)The wife made no contributions to the child in the three years she was overseas or otherwise absent, which fell to the husband with some assistance from nannies for which he paid. That is plainly the case;
(n)The wife’s parents provided him with $1,000 a fortnight for the care of the child for three years post-separation and paid her school fees. This was not in dispute and I accept it to be so;
(o)The husband attended to the post-separation Suburb L renovations with no assistance from the wife, albeit using matrimonial funds to do so. The wife accepted he had done so, as do I;
(p)He made the “overwhelming” parenting contributions. Certainly that was the case when the wife was absent and I accept that to be so. However, the husband maintained he was the child’s primary carer from her birth to 2015, despite his evidence that he worked 38 hours a week and “popped in and out” to check on the wife when her health was deteriorating. I do not accept he was the primary carer in this time period. Rather, I find that during the relationship, they each contributed to the child’s care and needs as best they could, with the husband very occasionally away for work overnight, and the wife away for some holidays and for health care: that is just how they worked together to live their joint lives. I accept the wife’s description of the husband as a “hands on” father when not at work. I conclude they each shared parenting and homemaking up to 2015, but by dint of their work commitments, the wife was the primary carer. However, it is undeniable that from 2016 to late 2019, the child did not see her mother, leaving the husband as her sole carer even with occasional assistance from nannies. He did receive funds from the maternal family from 2016 to 2019, and payment of school fees, but it is plain, and I find, that the day in day out physical and emotional care fell to him; and
(q)In December 2019, when parenting orders were made, the husband assumed primary care of the child; I accept that to be so as a consequence of the various parenting orders that were made. That is, the child’s time with her mother was initially supervised one night a fortnight, and then in April 2020 moved to one overnight, supervised, a month. Time again increased in November 2020 to two nights a fortnight, with a provision to graduate to three nights a fortnight in Term 2 2021, plus half holidays and shared special days. In April 2022, consent orders were made for the child to spend five nights a fortnight with her mother. I accept that the husband was the child’s primary carer during this period from December 2019 to trial.
I turn to the wife’s submissions. Senior Counsel for the wife handed up an aide de memoire, headed “Financial contribution summary”. I extract that below to do justice to her submissions. I have removed the first few lines which listed initial contributions, to which I have previously referred.
W[406] – parents set up [CC Company] business to employ husband and to facilitate obtaining visa. The business ultimately incurred substantial loss. When sold husband was given a car which he had been previously provided to him in the course of his employment and which he later traded for $10,000.
[Mr DD] [13] says immigration lawyer expenses of $12,000 were incurred in obtaining husband’s visa.
W[407] – in May 2008 wife purchases [Suburb AA] property for $800,000 plus stamp duty borrowing all from her parents’ company - $843,360 – additionally they paid legal fees.
No interest is paid – 100% borrowing clearly far from a commercial loan.
W[417] – the [Suburb AA] property is sold in May 2014 for $950,000 – loan of $843,360 is repaid to her parents and balance of funds applied in reduction of parents financing of [Suburb K] property.
As foreshadowed, I pause here to consider Suburb AA. The husband accepted he and the wife provided “not one dollar” for its purchase. He also accepted that the wife’s parents were repaid these funds and a little extra representing the net capital growth of the property. He also, appropriately accepted that, “…the fact of lending the money, let alone the terms otherwise, it was a significant benefit …? – yes.…” (Transcript 21 July 2022, p.267 lines 20-21).
I continue with the extract of the “Financial contribution summary”:
W[409] – in 2011 parents purchased [Motor Vehicle 4] for wife for $80,000 – thereafter they paid the registration and insurance.
W[411] – parents contributed in 2011/12 approximately $50,000 in costs of the [medical procedure].
W[413] – in March 2014 purchase of 1/45-53 [NN Street, Suburb K] for $1,620,000. Parents provided the whole of the purchase price together with stamp duty of $74,610 and legal costs.
They are paid back a bit under $100,000 from the sale of [Suburb AA] in May 2014.
Again, I pause to observe that the parties separated on 22 April 2016. I return to the “Financial contribution summary”:
W[424] – in March 2017 husband sells the parties’ [Suburb K] property for $2,450,000 – the whole of the funds are deposited to his bank account.
W[428] – the proceeds of [Suburb K] are applied to:
•June 2017 $1,725,000 to the purchase of the [Suburb L] property.
•In July 2017 $380,000 to the purchase of [Suburb HH] property.
•Approximately $137,000 to renovations etc to the [Suburb L] property.
Assuming stamp duty of approx. $100,000 total (total accounted for $2.342M), there is approx. $100,000 unaccounted for.
W[436] – October 2019 [Suburb HH] is sold for $406,000 - $150,000 paid to each party and an additional $60,224 to the wife.
W[476] – [Suburb L] property is sold for $3,850,000 – husband and wife each receive $970,131.12 and from wife’s money she discharges liability to [OO Finance] of $443,730 – balance funds held in trust.
W[12] – from 22 September 2010 to 31 August 2016 her parents provide the wife with $1,000 per week – beyond $300,000. Wife’s oral evidence clarifies this [sic] that earlier throughout relationship she was provided with $500 per week which from the time of [X]’s birth increased to $1000 per week.
W[419] – parents fund a large quantity of overseas holidays as particularised. [Mr DD] [80] says the total was about $150,000. Unchallenged evidence.
W[421] – post separation from October 2016 to January 2019 her parents provide husband with $1,000 per fortnight to contribute to[ X]’s expenses.
[Mr DD] [54] quantifies the amount at $61,000. Additionally, from September 2016 to April 2021 the parents pay school fees for [X] – [Mr DD] [50] and [51] totalling $63,408. No challenge to [Mr DD].
W[434] – in May 2019 parents pay out wife’s credit cards of $15,000 and contribute to her expenses post separation.
[Mr DD] [55] provided husband with $5,000 euro in 2017 when he was travelling to Europe with [X].
[Mr DD] [80] spent approx. $150,000 in paying for wedding for the parties in [Europe] and associated costs. No challenge to [Mr DD]’s evidence.
I accept the completeness of this list in its totality. It was not the subject of challenge or submissions to the contrary. It also accords with the evidence.
Similarly, Counsel for the husband made appropriate concessions about the money that flowed from the wife’s parents. Or as her client said in cross-examination about the property acquisitions:
And in getting to the proceeds of [Suburb L] and the proceeds of [Suburb HH], there’s a straight line through a series of property transactions that were funded entirely by your wife’s parents. Do you agree?‑‑‑Yes.
And not on one of those property purchases did you contribute a dollar?‑‑‑No.
(Transcript 21 July 2022, p.29 lines 17-19)
Whilst Counsel for the husband made the concessions on the evidence about these contributions, I accept the rider to her concession that these funds must be considered within the wider context of the required holistic assessment.
There was no suggestion that the parties would have generated a similar balance sheet without the wife’s parents’ assistance.
Evaluation of contributions overall
It was the husband’s position that a 45-55 per cent adjustment ought be made in favour of the wife. In oral submissions, the wife contended for a 70-30 per cent adjustment in her favour on her pool for contributions. However, the wife’s aide de memoire, entitled “Schedule of outcome of Wife’s position”, sought an overall property adjustment of 65 per cent in the wife’s favour on her pool, but 70 per cent on the husband’s. I place primacy on the oral submissions from the wife, as they were clear and consistent that contributions would be assessed as 70 per cent in the wife’s favour:
So standing as we do at the present time, it’s our contention that the contributions as against the current pool would be assessed 70 per cent to the favour of my client; 30 per cent to husband. And 30 per cent to him is not an insubstantial amount…
(Transcript 22 July 2022, p.27 line 45 to p.28 line 2)
In any event, whatever the wife’s position on contributions (and overall) it is ultimately my task to fashion an outcome that is just and equitable.
It cannot be denied that the wife’s parents and thus the wife have made overwhelming direct contributions. The husband accepted this to be so. But I cannot hold that up on one hand, and measure all other contributions against it. Rather, it is but one form of a contribution albeit one of considerable significance. Similarly, it cannot be denied that for a goodly period of time, the wife was absent from the child’s life, thus homemaking fell to the husband. Yet, I also cannot look at that contribution in isolation.
Turning to the myriad of contributions in this relationship, I have collectively considered the many, direct and overwhelming financial contributions made by the wife via her parents, both during the relationship and post separation. I accept that increases in property values were the subject of market forces, and accept the husband’s period of sole homemaking post-separation, and the primary parenting from December 2019 to trial. Considering these factors together with the other contributions of both parties which I have listed, then holistically, I assess the wife’s contributions nevertheless exceeded those of the husband by reference to the financial accommodations of her parents, warranting a 60 per cent adjustment in her favour, for contributions.
On a pool of $3,942,758, 60 per cent is $2,365,655 (rounded) to the wife and 40 per cent to the husband is $1,577,103 (rounded).
I accept that this is a differential of 20 per cent which itself equates to a dollar differentiation of $788,552 (rounded).
Section 79(4)(d).
The property order I will make will not affect the earning capacity of either of the parties under s 79(4)(d) of the Act. Neither party suggested otherwise.
Section 75(2) Factors
Counsel for the husband sought a six per cent adjustment due to him having the primary care of the child with minimal child support, and, that the wife has the financial resource of her parents. Counsel confirmed that child support was as assessed.
Senior Counsel for the wife submitted that:
At the end of where I’m endeavouring to take this is to say if you’re against us at 70 per cent for contributions, then we’re looking for a section 75(2) adjustment, and, frankly, one that’s going to take us back to 70 per cent.
(Transcript 22 July 2022, p.28 lines 44-46)
Subsection 75(2)(a) – the age and state of health of each of the parties
Nothing turns on this. The husband is currently aged 44 and the wife is aged 45 and there is no evidence before me of current poor health for either party.
Subsection 75(2)(b) – the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
The husband worked for the entirety of the relationship, save for a short time in early 2020 when he had been made redundant. At time of trial, and by reference to his Financial Statement, the husband is earning $1,865 a week (gross) and is paid benefits for his car, phone and superannuation. He pays $750 a week for rent. He has Motor Vehicle 2, Motor Vehicle 3 and the recreational vehicles, albeit of modest values.
The wife is currently studying and is currently not earning any income. The wife does however have the benefit of $250 a week from BB Pty Ltd; this is an entity of her parents. There is a dispute between the wife and her father whether this $250 a week is a gift or a loan. I cannot resolve that, nor did the parties ask me to. Looking at the wife’s Financial Statement, she currently pays $1,000 in rent a week and pays $9 a week in child support.
As for the contention that the wife’s parents are a financial resource, I observe that no value was given to these apparent resources in the joint balance sheet. In circumstances where Mr DD is transitioning to retirement and his wife has retired, I accept that just because they have been generous in the past, does not mean they will into the future. Accordingly, I accept the wife’s submission:
Clearly, she has a resource that they’ve told her she can have the use of the [Suburb C] unit, and that’s of some value. But, for example, one couldn’t sit at this point and assume that it would be guided by, “Well, they have provided $1.6 million when [Suburb K] was purchased, so they might well give her another $1.6 million to assist her into some accommodation.”
…
Those things could have been explored. But what I’m endeavouring to put from all of this is a conclusion that, from time to time, there will be benefits from the wife – to the wife from her parents is not controversial. But an expectation that there will be significant financial assistance or windfall from them is not one that could be even approached.
(Transcript 22 July 2022, p.27 line 38 to p.28 line 4)
I agree and accept what Mr DD said about his future financial plans in his affidavit. He was not challenged about this.
I am also conscious that whilst the parties have agreed to add-back significant distributions, the reality of the situation for the wife is that she has $395 in the bank and bullion worth almost $110,000, whilst the husband has more than $750,000 in his bank accounts (excluding funds in trust)(the parties respective Financial Statements).
The husband is clearly in a stronger financial position than the wife, even taking into account the future “benefits to the wife” from her parents as described above.
Subsection 75 (2)(c) – whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
The child is nine (9) years of age. I have already referred to the consent orders of 21 July 2022 which see the child living with the husband eight nights a fortnight and the wife, the other six nights during term time. Holidays and special days are shared.
I do not accept the husband’s submission that the eight-six term time parenting arrangement, along with half holidays and shared special days, warrants any adjustment to the husband, let alone part of an overall 6 per cent swing in his favour, or a 12 per cent differential. I say that because the eight-six arrangement is but one day away from equal time: had that been ordered, it would be inconceivable that the husband would submit he ought have an adjustment in his favour for this consideration.
Nothing turns on this.
Subsections 75 (2)(d) and (e) – commitments of each of the parties that are necessary to enable the party to support himself or herself, and a child or another person that the party has a duty to maintain; and the responsibilities of either party to support any other person
No submissions were made about this.
Subsection 75 (2)(f) – the eligibility of either party for a pension, allowance or benefit under any law of the Commonwealth, of a State or Territory or of another country; or any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia; and the rate of any such pension, allowance or benefit being paid to either party
Not applicable.
Subsection (2)(g) – where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable
The parties divorced on 16 July 2020. No submissions were made under this subsection. Nothing turns on it.
Subsection (2)(h) – the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income
Maintenance is not being sought by either party. This is not applicable.
Subsection (2)(ha) – the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant
Not applicable.
Subsection (2)(j) – the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party
Maintenance is not being sought by either party. This is not applicable.
Subsection (2)(k) – the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration
Maintenance is not being sought by either party. This is not applicable.
Subsection (2)(l) – the need to protect a party who wishes to continue that party’s role as a parent
No submissions were made about this.
Subsection (2)(m) – if either party is cohabiting with another person—the financial circumstances relating to the cohabitation
No submissions were made about this.
Subsection (2)(n) – the terms of any order made or proposed to be made under section 79 in relation to the property of the parties; or vested bankruptcy property in relation to a bankrupt party
Not applicable.
Subsection (2)(naa) – the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to a party to the marriage; or a person who is a party to a de facto relationship with a party to the marriage; or the property of or vested bankruptcy property in relation to a person covered by the categories aforementioned
Not applicable.
Subsection (2)(na) – any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage
The wife is currently paying the father $9 a week in child support. It is as assessed.
Subsection (2)(o) – any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
As I have determined the loan from Mr DD to be a liability in the balance sheet, it is not necessary for me to consider that liability on the alternate basis, being a s 75(2)(o) factor. I have already given reasons for this.
Subsections (2)(p) and (q) – the terms of any financial agreement and any Part VIIIAB financial agreement that is binding on the parties to the marriage
Not applicable.
Evaluation of s 75(2) factors
There is clearly an income and income earning disparity between the parties and one which sees the husband in the stronger position. I make a five per cent adjustment in the wife’s favour for this factor. On a pool of $3,942,758, the money value of that is $197,138 (rounded). The differential of 10 per cent represents $394,276 (rounded).
WHAT PROPERTY ORDER IS APPROPRIATE TO ACHIEVE A JUST AND EQUITABLE OUTCOME?
Accordingly, the husband has an overall entitlement of 35 per cent of the pool of propertyas found in the balance sheet above of $3,942,758. This equates to a sum of $1,379,965 (rounded).
He currently has in his possession or will receive by way of agreed adjustments the following:
Item Value ASSETS 1. Motor Vehicle 2 $8,000 2. Motor Vehicle 3 $7,000 3. Recreational vehicles $2,500 4. Westpac eSaver Account …38 $1,550 5. Westpac eSaver Account …07 $106 6. Westpac Choice Account …40 $1,108 7. Westpac Choice Account …81 $48 8. Household contents $5,000 9. Wine $3,000 10. Interim distribution of Suburb HH Property $150,000 11. Interim distribution of Suburb L Property proceeds of sale $1,033,735 12. Superannuation Fund 1 $151,566 Sub-total $1,363,613 LIABILITIES 13. Westpac Mastercard Account …50 $0 14. Westpac Card Account …64 $4,927 Sub-total $4,927 NETT TOTAL ASSETS (including superannuation) $1,358,686
To achieve that overall outcome of $1,379,965 and taking account what he will retain ($1,358,686), then, that means the husband needs $21,279 (rounded) from the funds in the controlled monies account.
The wife has an overall entitlement of 65 per cent of the pool, being $2,562,793 (rounded).
She currently has in her possession or will retain the following:
Item Value ASSETS 1. Motor Vehicle 4 $8,000 2. Westpac Choice Basic Account …88 $395 3. Personal effects $5,000 4. Interim distribution of Suburb HH Property proceeds of sale $150,000 5. Interim distribution of Suburb HH Property proceeds of sale $0 6. Interim distribution of Suburb L Property proceeds of sale $986,967 Sub-total $1,150,362 LIABILITIES 7. Westpac Card Account …21 $519 8. Monies owed to Mr DD $163,798 Sub-total $164,317 SUPERANNUATION 9. Superannuation Fund 2 $0 Sub-total $0 NETT TOTAL ASSETS (including superannuation) $986,045
To achieve that overall outcome of $2,562,793 and taking account what the wife will retain ($986,045), then, that means the wife needs $1,576,748 from the funds in the controlled monies account.
This overall outcome results in a differential of 30 per cent which equates to $1,182,827.
Standing back, I find that the distribution of the property of the parties in the terms identified above is just and equitable.
I am also content to make the three proposed consent orders at the beginning of my orders. I do so because the first order is consistent with the husband’s answers in cross-examination; in short, the husband withdrew the child from N School without the appropriate notice thereby incurring the potential for a term’s fees to be charged. This was not long after the wife had moved to Suburb L and the father, with the child, then moved away from Suburb L to Suburb J. It is appropriate that the husband indemnify the wife for any consequences of his sole actions.
I also make the second proposed consent order as it too was consistent with the husband’s evidence being that for reasons apparently unknown to him, he was receiving Medicare refunds for health care for which the wife had paid. It is appropriate he repay those funds to her. I have aligned the timing of this repayment with the payment of monies to the parties from the controlled monies account. This will give the parties the opportunity to account for this Medicare repayment as part of the wider distribution.
I am also content to make the order proposed about the wife retuning some wine to the husband. I do so as, the parties agreed, and that item appears on the balance sheet (Item 15) and as an item the husband will retain.
The husband sought an order that distributions from the trust account be made within 14 days. The wife’s minute was silent on timing for this trust account distribution, but sought repayment of the Medicare rebates within seven days. I will align these payment dates to seven days. I do so because the money is there in the trust account and the parties may wish to set off the Medicare money from the husband’s distribution, being then one transaction as opposed to two. I will not make that as an order though and leave it to the parties to deal with this as they wish.
I otherwise make orders for the parties to apply on any matters of interpretation or implementation and will give the parties 28 days to make any applications for costs.
I certify that the preceding one hundred and forty-five (145) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Brasch. Associate:
Dated: 28 August 2022
- AGLC
- Medvitz & Baginski [2022] FedCFamC1F 632
- Case
- [2022] FedCFamC1F 632
- Decision Date
CaseChat Overview and Summary
The court considered the income and earning disparity between the parties, making a five per cent adjustment in the wife’s favour. Additionally, the court assessed the terms of any financial agreement and any Part VIIIAB financial agreement that was binding on the parties to the marriage, although no such agreements were applicable in this case. The court concluded that the husband was entitled to 35 per cent of the pool of property, equating to $1,379,965, while the wife was entitled to 65 per cent, being $2,562,793.
In summary, the court determined that the husband was entitled to 35 per cent of the couple’s assets, while the wife was entitled to 65 per cent. This outcome was reached after considering the relevant factors under section 75(2) of the Family Law Act 1975 (Cth), and the court made specific findings regarding the income disparity between the parties and the absence of any applicable financial agreements. The court’s decision provides a clear division of the couple’s property, ensuring a just and equitable outcome for both parties.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
Evidence
Evidence Before The Court
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Maintenance is not being sought by either party. This is not applicable.Subsection (2)(k) – the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration Maintenance is not being sought by either party. This is not applicable.Subsection (2)(l) – the need to protect a party who wishes to continue that party’s role as a parent No submissions were made about this. Subsection (2)(m) – if either party is cohabiting with another person—the financial circumstances relating to the cohabitation No submissions were made about this.Subsection (2)(n) – the terms of any order made or proposed to be made under section 79 in relation to the property of the parties; or vested bankruptcy property in relation to a bankrupt party Not applicable. Subsection (2)(naa) – the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to a party to the marriage; or a person who is a party to a de facto relationship with a party to the marriage; or the property of or vested bankruptcy property in relation to a person covered by the categories aforementioned Not applicable. Subsection (2)(na) – any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage The wife is currently paying the father $9 a week in child support. It is as assessed. Subsection (2)(o) – any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account As I have determined the loan from Mr DD to be a liability in the balance sheet, it is not necessary for me to consider that liability on the alternate basis, being a s 75(2)(o) factor. I have already given reasons for this. Subsections (2)(p) and (q) – the terms of any financial agreement and any Part VIIIAB financial agreement that is binding on the parties to the marriage Not applicable. Evaluation of s 75(2) factors There is clearly an income and income earning disparity between the parties and one which sees the husband in the stronger position. I make a five per cent adjustment in the wife’s favour for this factor. On a pool of $3,942,758, the money value of that is $197,138 (rounded). The differential of 10 per cent represents $394,276 (rounded). WHAT PROPERTY ORDER IS APPROPRIATE TO ACHIEVE A JUST AND EQUITABLE OUTCOME? Accordingly, the husband has an overall entitlement of 35 per cent of the pool of propertyas found in the balance sheet above of $3,942,758. This equates to a sum of $1,379,965 (rounded). He currently has in his possession or will receive by way of agreed adjustments the following: To achieve that overall outcome of $1,379,965 and taking account what he will retain ($1,358,686), then, that means the husband needs $21,279 (rounded) from the funds in the controlled monies account. The wife has an overall entitlement of 65 per cent of the pool, being $2,562,793 (rounded).