FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Min & Orton (No 3) [2024] FedCFamC1F 387
File number: SYC 1579 of 2021 Judgment of: HARPER J Date of judgment: 6 June 2024 Catchwords: FAMILY LAW – PROPERTY – Where wife seeks property division of 45 per cent in her favour pursuant to the Family Law Act 1975 (Cth) (“the Act”) – Where husband contends that it would not be just and equitable to make any adjustment – Where marriage was of short duration – Where husband brought in the majority of the assets at the commencement of the relationship – Where husband made sole financial contributions during the relationship – Where wife made modest homemaker contributions – Where parties entered into a financial agreement pursuant to s 90UB of the Act prior to cohabitation – Where the financial agreement ceased to be binding upon the parties’ marriage – Where the Court previously dismissed the husband’s application for rectification of the agreement – Whether the agreement relevant as evidence of the parties’ intentions and financial arrangements at the time it was drafted – Consideration of whether it would be just and equitable to make any property division – Where wife sought to argue that largesse by the husband during the relationship entitled her to a significant property adjustment – Where wife sought a Kennon adjustment and raised issues of non-disclosure – Dispute as to valuation evidence – Where wife holds 14 per cent of the assets if no property division effected – Court held not just and equitable to make any property division – In the alternative Court found that the wife would not receive a greater property division than 14 per cent. Legislation: Family Law Act 1975 (Cth) Pt VIII, ss 75, 79, 80, 81 Cases cited: Aitken & Aitken (2023) FLC 94-142; [2023] FedCFamC1A 69
AJO & GRO (2005) FLC 93-218; [2005] FamCA 195
Anson & Meek(2017) FLC 93-816; [2017] FamCAFC 257
Benson & Drury (2020) FLC 93-998; [2020] FamCAFC 303
Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116
Black and Kellner (1992) FLC 92-287; [1992] FamCA 2
Blatch v Archer (1774) 1 Cowp 63
Briese and Briese (1986) FLC 91-713; [1985] FamCA 23
Britt & Britt (2017) FLC 93-764; [2017] FamCAFC 27
C and C [1998] FamCA 143
Candle & Falkner (2021) FLC 94-069; [2021] FedCFamC1A 102
Chapman & Chapman (2014) FLC ¶93–592; [2014] FamCAFC 91
Chea & Sok (No 2) [2023] FedCFamC1F 1052
Cosola & Moretto (2023) FLC 94-143; [2023] FedCFamC1A 61
Dovgan & Dovgan [2021] FamCA 306
DW & GT (2005) FLC 93-217; [2005] FamCA 161
Gadhavi & Gadhavi [2023] FedCFamC1A 117
Grunseth & Wighton(2022) FLC 94-099; [2022] FedCFamC1A 132
Harris & Dewell (2018) FLC 93-839; [2018] FamCAFC 94
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
Keating & Keating (2019) FLC 93-894; [2019] FamCAFC 46
Kennon v Kennon (1997) FLC 92-757; [1997] FamCA 27
M and M [1998] FamCA 42
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- Min & Orton (No 3) [2024] FedCFamC1F 387
- Case
- [2024] FedCFamC1F 387
- Decision Date
CaseChat Overview and Summary
The case of Min & Orton (No 3) involves a property dispute between Ms Min, the wife, and Mr Orton, the husband, following their divorce. The wife sought a property division of 45 per cent in her favour under the Family Law Act 1975 (Cth), while the husband argued against any adjustment, asserting that it would not be just and equitable. The marriage was of short duration, and the husband contributed the majority of the assets. The wife contended that the husband's gifts during the relationship entitled her to a significant property adjustment, while the husband maintained that the financial agreement signed prior to their marriage should be considered. The court had to determine whether the financial agreement was relevant as evidence of the parties’ intentions and financial arrangements and whether it would be just and equitable to make any property division.
The legal issues before the court included the relevance and weight of the financial agreement, the application of the principles of "just and equitable" from the High Court's decision in Stanford, and the consideration of the factors set out in s 79(4) of the Act. The court also had to resolve disputes regarding the valuation of the husband's business and address the wife's arguments regarding non-disclosure and the Kennon adjustment. The court found that the existing property interests were crucial, and there was no assumption that the parties' rights to, or interests in, marital property should be different from those that existed at the time of trial. The court also held that the financial agreement, while relevant, did not bind the court to a specific outcome. Ultimately, the court concluded that it was not just and equitable to make any property division in favour of the wife, or alternatively, that she would not receive a greater property division than 14 per cent.
The court's reasoning hinged on the existing property interests of the parties, the relevance of the financial agreement, and the broad and largely indeterminate criteria of what is just and equitable. The court emphasised that the existing property interests were crucial and that there was no assumption that either party had a right to a division of property. The court found that the husband's contributions to the assets and the financial agreement signed prior to the marriage were significant factors. The court also considered the wife's contributions and the duration of the marriage. After weighing all the factors, the court determined that the existing arrangement of property interests was sufficient and that any adjustment would not be just and equitable. The court further found that the wife would not receive a greater property division than 14 per cent of the assets.
The final orders of the court dismissed both the wife's initiating application and the husband's response, with no order as to costs unless an application was filed within 28 days of the date of the orders. This decision underscores the importance of the existing property interests and the need for a principled approach in determining whether a property adjustment is just and equitable.
The legal issues before the court included the relevance and weight of the financial agreement, the application of the principles of "just and equitable" from the High Court's decision in Stanford, and the consideration of the factors set out in s 79(4) of the Act. The court also had to resolve disputes regarding the valuation of the husband's business and address the wife's arguments regarding non-disclosure and the Kennon adjustment. The court found that the existing property interests were crucial, and there was no assumption that the parties' rights to, or interests in, marital property should be different from those that existed at the time of trial. The court also held that the financial agreement, while relevant, did not bind the court to a specific outcome. Ultimately, the court concluded that it was not just and equitable to make any property division in favour of the wife, or alternatively, that she would not receive a greater property division than 14 per cent.
The court's reasoning hinged on the existing property interests of the parties, the relevance of the financial agreement, and the broad and largely indeterminate criteria of what is just and equitable. The court emphasised that the existing property interests were crucial and that there was no assumption that either party had a right to a division of property. The court found that the husband's contributions to the assets and the financial agreement signed prior to the marriage were significant factors. The court also considered the wife's contributions and the duration of the marriage. After weighing all the factors, the court determined that the existing arrangement of property interests was sufficient and that any adjustment would not be just and equitable. The court further found that the wife would not receive a greater property division than 14 per cent of the assets.
The final orders of the court dismissed both the wife's initiating application and the husband's response, with no order as to costs unless an application was filed within 28 days of the date of the orders. This decision underscores the importance of the existing property interests and the need for a principled approach in determining whether a property adjustment is just and equitable.
Orders
Orders of the court
SYC 1579 of 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:
MS MIN
Applicant
AND:
MR ORTON
Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
6 JUNE 2024
THE COURT ORDERS THAT:
1. The Applicant’s Initiating Application be dismissed.
2. The Respondent’s Response be dismissed.
3. If any party seeks costs, an application in the appropriate form supported by affidavit evidence is to be filed and served within 28 days of the date of these orders.
4. If no application for costs is filed within the time specified, there shall be no order as to costs.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
Background
Background to the litigation
These are property proceedings between the applicant wife, Ms Min (“the wife”) and the respondent husband, Mr Orton (“the husband”).BRIEF BACKGROUND The husband was born in the United Kingdom in 1951 and is presently 73 years of age. The husband moved to Australian in 1970 and became an Australian citizen in 1997. The wife was born in 1970 in Country D and is presently 54 years of age. The wife is an Australian citizen. She speaks five languages including English. It was agreed that the parties met in late 2007 and commenced a relationship thereafter. They disputed when the relationship became serious, however it was a common position that cohabitation commenced in 2013. The parties married in 2014, separated on a final basis on 2 September 2020 and divorced in 2022. There were no children of the relationship. Both parties were previously married. The husband has two children from his former relationship, Ms E aged 46 years and Ms F aged 44 years. The wife purchased G Street, Suburb H (“Suburb H”) in 1998 for around $220,000. The husband purchased J Street, Suburb K (“Suburb K”) in 2007 for around $680,000. The husband purchased L Street, Suburb M (“Suburb M”) in 2012 for around $650,000. The husband established his business N Business, formerly under another name, in 2011. The husband is the sole director, secretary and shareholder of N1 Pty Ltd and N2 Pty Ltd (collectively “N Business”). These entities are corporate trustees of a number of trusts through which N Business is conducted. The business operates across a number of locations in Sydney. The husband established a number of trust structures related to N Business which will be referred to in this judgment where relevant. The wife moved into Suburb K with the husband in 2013 and rented out Suburb H. The wife worked in the service industry until they married in 2014 after which the wife ceased paid employment. In August 2013 the parties entered into a financial agreement (“the Agreement”) which was expressed to be a Pt VIIIAB Financial Agreement pursuant to s 90UB of the Family Law Act 1975 (Cth) (“ the Act”) applying to parties in a relationship prior to marriage. Shortly after signing the Agreement the wife moved into Suburb K with the husband and rented out Suburb H. Following separation, the wife moved into rental accommodation and husband paid the wife three payments of $25,000 on 27 August 2020, 2 September 2020 and 29 October 2020, totalling $75,000. The husband continues to reside at Suburb K and work in N Business. The wife resided in Country D with family between late 2022 and early 2023 and again from mid-2023 until early 2024. She continues to rent out Suburb H but is unemployed and in receipt of Centrelink payments. She is presently based in Country D but claimed in her oral evidence that she intends to return to Australia.PROCEDURAL HISTORY The wife commenced property proceedings in the Family Court of Australia (as it then was) on 8 March 2021. She sought division of the property pool pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) and spousal maintenance. The husband in his Response filed 17 May 2021, sought the rectification of the Agreement on the basis that it was mutually intended to apply during both the de facto relationship and a subsequent marriage.
Evidence
Evidence Before The Court
The material tendered and relied upon by the parties is set out at Schedule 1 at the conclusion of these reasons.Expert Evidence Mr R was jointly appointed by the parties on 23 June 2022 to value the husband’s interest in N Business and its associated entities. Mr R prepared an initial valuation report dated 14 October 2022. On 30 November 2023, the parties jointly instructed Mr R to prepare an updated report. He prepared an updated valuation dated 30 January 2024 and filed 11 March 2024. The husband disputed Mr R’s initial valuation report dated 14 October 2022 and sought to rely on the affidavit of Mr Q filed 17 July 2023. Mr Q was and continues to be a finance professional for the husband in his personal capacity and for N Business. Mr R was cross-examined. I will return to the issue of Mr R’s valuation evidence later in these reasons. The affidavit of Mr Q was read subject to a number of objections and he was ultimately not required for cross-examination.ALTERING PROPERTY INTERESTS - SECTION 79 Part VIII of the Act sets out the legislative provisions relating to property orders that may be sought when parties are or were married. The central provision is s 79 of the Act, which gives the Court power to make such orders for alteration of property interests as it considers appropriate. Section 79(2) of the Act provides that:The court must 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. Section 79(4) of the Act set outs the factors to be taken into account in considering what order, if any, should be made. These will be discussed in detail below. Having regard to the language of both s 79(1) and s 79(2) of the Act, the Court is required to make orders which are not only “just and equitable” but also “appropriate” (Zao & Lee [2019] FamCAFC 169 at [48]; Aitken & Aitken (2023) FLC 94-142 at [59]). Section 80 grants specific powers to make a range of different orders to adjust property interests. Section 81 is relevant and reflects a policy of making orders which finally determine the financial relationship between the parties and avoid further proceedings, as far as practicable. In Stanford & Stanford (2012) 247 CLR 108 (“Stanford”) the High Court made clear at [37] it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. The resolution of dispute as formulated by each party’s proposal is assisted by close consideration of fundamental propositions set out by the High Court in Stanford:35.It will be recalled that s 79(2) provides that “[t]he 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”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.36.The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds. And while the power given by s 79 is not “to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured.37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to “altering the interests of the parties to the marriage in the property” (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.38.Secondly, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. And as four members of this Court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong:“The judge called upon to decide proceedings of that kind is not entitled to do what has been described as ‘palm tree justice’. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down”.39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”. The question presented by s 79 is whether those rights and interests should be altered.40. Thirdly, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.41. Adherence to these fundamental propositions in exercising the power in s 79 gives due recognition to “the need to preserve and protect the institution of marriage” identified in s 43(1)(a) as a principle to be applied by courts in exercising jurisdiction under the Act. If the parties have made a financial agreement about the property of one or both of the parties that is binding under Pt VIIIA of the Act, then, subject to that Part, a court cannot make a property settlement order under s 79. But if the parties to a marriage have expressly considered, but not put in writing in a way that complies with Pt VIIIA, how their property interests should be arranged between them during the continuance of their marriage, the application of these principles accommodates that fact. And if the parties to a marriage have not expressly considered whether or to what extent there is or should be some different arrangement of their property interests in their individual or commonly held assets while the marriage continues, the application of these principles again accommodates that fact. These principles do so by recognising the force of the stated and unstated assumptions between the parties to a marriage that the arrangement of property interests, whatever they are, is sufficient for the purposes of that husband and wife during the continuance of their marriage. The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.(Footnotes omitted) (Emphasis in original)
Decision
Reasons for decision
Neither party sought to disturb the superannuation interests. No clear submissions were directed to the different figures for superannuation on Exhibit 12. I see no reason not to accept the husband’s figures for his superannuation interests and the value of the wife’s superannuation was agreed.Conclusions and Assets Pool According to my findings the balance sheet between the parties is as follows: According to my findings therefore the net property pool is $7,174,563 (rounded) including notional property and superannuation. The wife holds net assets of $974,043 or 14 per cent (rounded) of the pool. The husband holds $6,200,520 or 86 per cent (rounded) of the pool. In final submissions, counsel for the wife contended that a payment of $3,100,000 was needed to give the wife her entitlement. This was not explained clearly, and since the wife already holds assets worth $974,043, $3,100,000 would give her a percentage of the assets, well beyond her asserted claim.SECTION 79(2) Having identified the property interests of the parties, I return to the question whether any order adjusting property would be just and equitable in the circumstances of this case. Clearly, while the bare fact of involuntary separation will not be enough to justify a property adjustment order, the High Court’s statement of principle in Stanford (above at [42]) makes clear that the cessation of common use of property by the spouse parties, and their express or implicit assumptions that existing arrangements of marital property interests were sufficient or appropriate during the marriage, are some indication that a property adjustment order would be just and equitable. However, this is not determinative. Clearly, since the expression “just and equitable” is a qualitative description of “a conclusion reached after examination of a range of potentially competing considerations”, and does not admit of exhaustive definition, the criteria of what is just and equitable for the purposes of s 79(2) are broad and largely indeterminate in the abstract. But the fundamental propositions stated in Stanford offer some guidance, including the long established starting point that the existing property interests are crucial, that there is no assumption that the parties’ rights to, or interests in, marital property are or should be different from those that exist at the time of trial and there is no assumption that either party has a right to a division of property (Stanford at [39]–[40]), as the husband emphasised. Financial Agreement This leads to a consideration of the Agreement. The husband argued the existence of the Agreement is significant in this regard, because it set out the assumptions of the parties about their property during the early relationship, during the marriage and after separation. In Bevan the Full Court explained the importance of the parties’ assumptions or agreements about how their property interests are arranged:119. In our view, if the three “fundamental propositions” [in Stanford] can truly accommodate any consideration the parties gave to how their property interests should be arranged during the continuance of their marriage, they must also accommodate express consideration given to how those interests should be arranged after separation. Indeed, the argument for doing so is stronger, given that any mutual understanding is less likely to have been affected by extraneous influences that would be at work whilst their relationship was intact.120. This is not to suggest that any understanding between spouses would be conclusive of any later dispute, since an agreement can only be conclusive when the s 90G(1) formalities are satisfied or when a s 90G(1B) declaration is made. Long experience in this jurisdiction teaches that there will be cases in which other factors will be present that would make it just and equitable to make an order inconsistent with a previous understanding, even one reached after separation. But the reasoning in Stanford makes clear that such an understanding would have to be a factor to be taken into account in deciding whether it would be just and equitable to make orders altering existing interests. This reasoning is entirely consistent with what was said by the Full Court in Woodcock v Woodcock (1997) FLC 92-739 at 83,968 to 83,969.121. Once it is accepted that a prior agreement or representation is relevant to the justice and equity of the outcome, we consider that the period of time a party has allowed to elapse before making a claim inconsistent with that agreement or representation must also be a material factor …
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.