MITCHELL & KEENER

[2013] FCCA 705

FEDERAL CIRCUIT COURT OF AUSTRALIA

MITCHELL & KEENER [2013] FCCA 705

Catchwords:
FAMILY LAW – Property settlement – section 79(2) considerations – equitable interests – contributions.

Legislation:  
Family Law Act 1975, ss.75, 79, 104

Stanford v Stanford (2012) 293 ALR 70
Shepherd v Doolan [2005] NSWSC 42 at [37]
Muschinski v Dodds (1985) 160 CLR 583
Calverley v Green (1984) 155 CLR 242
Giumelli v Giumelli (1999) 196 CLR 101
Friar & Friar [2011] FamCAFC 71
Baumgartner (1987) 164 CLR 137
Crafter and Ors and Crafter and Ors [2012] FamCAFC 199

Applicant: MS MITCHELL

Respondent: MR KEENER

File Number: MLC 8065 of 2011

Judgment of: Judge Small

Hearing date: 27 June 2013

Date of Last Submission: 27 June 2013

Delivered at: Melbourne

Delivered on: 12 July 2013

REPRESENTATION

Counsel for the Applicant: Ms Mitchell in person

Solicitors for the Applicant: Nil

Counsel for the Respondent: Ms Williams

Solicitors for the Respondents: Coote Family Lawyers

ORDERS

1. That the Application of the wife filed 13 April 2012 be and is hereby dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Mitchell & Keener is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

MLC 8065 of 2013

MS MITCHELL

Applicant

And

MR KEENER

Respondent

REASONS FOR JUDGMENT

Introduction

1. This matter involves a property settlement Application filed by the wife on 13 April 2012.

2. In that Application, the wife seeks simply “that pursuant to s.79 of the Family Law Act, there be a just and equitable split of the matrimonial asset pool as ordered by this Honourable Court.” At trial, she stated that she sought the sum of $60,000.00 by way of property settlement.

3. The husband filed a Response on 9 May 2012 seeking that the wife’s Application be dismissed and that she pay the husband’s costs of the proceedings. That has remained the husband’s position throughout the proceedings and at trial, save that in closing submissions Counsel for the husband conceded that she would not be making an application for the wife to pay the husband’s costs.

Background

1. At the time of trial, the husband was almost 71 years old and the wife was 61.

2. The parties met in [omitted] and married there [in] 2005. It was the second marriage for both.

3. The husband, who had lived in Australia since migrating from [omitted] in 1967, immediately returned to Victoria and prepared the way for the wife to migrate to Australia. She arrived in Victoria in November 2005 and the parties began their joint life in the husband’s home in [G].

4. The parties separated on [omitted] 2009 when the wife left the husband while they were on a holiday trip to Europe. The marriage had lasted a few days less than four years.

5. There are no children of the marriage.

Initial Contributions

1. At the time of the marriage, the husband owned a property at [G] which was encumbered by a mortgage; a [omitted] Licence which he had bought in 1978, some 27 years prior to the marriage; some household chattels and a motor vehicle.

2. It is common ground that the wife had no assets.

3. It was the husband’s evidence that he had bought the [G] property in 2002 for a purchase price of approximately $119,000, which was met by his savings and a mortgage loan of $80,000.

4. At the time of the marriage the husband deposes that the property was worth about $240,000 with the mortgage standing at about $60,000.

Contributions during the Marriage

1. It is common ground between the parties that the wife did not work after she arrived in Australia, and that the husband paid all of her expenses until the date of separation.

2. That is, the husband provided 100% of the financial contributions to the marital assets before and during the marriage, and to the parties’ welfare during the marriage.

3. The wife performed various home duties such as shopping, cooking and cleaning and choosing furnishings. The husband paid for all of the parties’ material and health needs.

4. The [omitted] licence, which the husband had used to earn his living, was sold in December 2008 for $320,000. From the proceeds, the husband says he paid the following amounts:

   Discharge of the mortgage loan  $60,000

   Australian driving holiday March 2009               $10,000

   European holiday May to July 2009  $40,000

   Payments to the husband’s siblings   $100,000

   The husband’s dental operation   $4,000

   Trip to Croatia in 2010   $10,000

   Payments to the wife   $38,000

   Total   $262,000

   None of these payments, save the amount of the payments to the wife, was contradicted by the wife at trial.

5. This leaves a residue of about $58,000, which the husband says he spent on living expenses between the end of 2008 and mid 2013, a period of about 4½ years. He deposes in his Financial Statement sworn 25 June 2013 that his cash reserves now consist of about $1,000 held in a Commonwealth Bank account.

6. The wife disputes the amount the husband paid to her but in evidence said that while she did not know how the husband had spent the proceeds of the [omitted] licence sale, she could not dispute the other payments. 

7. She did say during final submissions that the husband had “hidden” some of the sale proceeds from the [omitted] sale, but there is no evidence anywhere in her material, or in her oral evidence to support that assertion.

8. It was her evidence  at trial that the husband had paid her following the sums after the sale of the [omitted] licence:

   December 2008              $5,000 to buy clothes

   March 2009$3,000 to pay for her niece’s university fees in [omitted]

   June 2009                        $20,000 to buy a unit in [omitted] for her son.

9. That is, the wife says she received a total of $28,000 from the sale proceeds of the [omitted] licence between December 2008 and the date of separation in July 2009.

10. At trial she denied that she had received any money to spend on the European trip in May 2008, although she had previously deposed in Affidavit material that she had received $5,000. If she had received $5,000 at that time, the total amount she received would be $33,000.

11. The $20,000 given to her to pay for a unit in [omitted] has been lost, in circumstances where the wife says the real estate agent who was conducting the purchase defrauded her and absconded with the funds. At trial, she conceded under cross-examination that the husband had given her the $20,000 to do with as she pleased and that it was not tied to the purchase of a unit.

12. She further conceded that the husband had given unspecified amounts of money to her son during the marriage.

The parties’ current circumstances

1. The husband’s evidence is that he lives on an old age pension of $335 per fortnight, which he supplements, with the full knowledge of Centrelink, with part-time weekend [occupation omitted] which brings in anywhere from $200 to $350 per fortnight. His earnings do not affect his pension entitlements. He says his capital is confined to the $1,000 in his bank account. He has been forced to remortgage his home in order to pay his legal fees in these proceedings.

2. The wife receives a widow’s pension of $380 per fortnight plus some unspecified rental assistance. She says she is unable to work because of depression, high cholesterol and thyroid problems. However, she conceded under cross-examination that the psychiatric report of Dr S dated 25 March 2013 states that with treatment for her depression, she may well be able to work part-time. She stated that she has “worked long enough” in her life and does not want to work any more.

Court proceedings

1. This matter first came before the Court on 22 May 2012, when procedural orders for a Conciliation Conference were made, and the matter was adjourned to a Final Hearing on 30 October 2012.

2. At the Final Hearing on 30 October, the wife did not appear, but caused her General Practitioner to send to the Court a very simple medical certificate stating that she was “unfit to attend to her usual occupation” on that day. The certificate was completed on 29 October 2012.

3. Ms Mitchell gave evidence at trial that she had returned from a holiday to [omitted] on 24 October 2012.

4. Federal Magistrate Connolly (as His Honour then was) made Orders on 30 October 2012 in the following terms:

   1. The wife cause to be made, filed and served an Affidavit explaining her non-attendance this day by 4:00pm on 30 November 2012.

   2. Otherwise all extant applications be adjourned to the duty list of this Court for further mention on 10 December 2012 at 9:45am.

   3. The Respondent husband’s costs of this day be fixed in the sum of $3,950.00 and reserved.

   4. In the event that the Applicant wife fails to comply with paragraph 1 hereof, the Respondent husband have liberty to apply to have the matter proceed on an undefended basis.

5. The wife did not comply with paragraph 1 of the orders of 30 October 2012.

6. On 5 December 2012, the wife filed an Affidavit responding to previous Affidavits of the husband. She did not make any mention of the hearing on 30 October or the orders made on that day.

7. On 10 December 2012, the wife’s associate lawyer filed an Affidavit stating that the doctor who provided the certificate on 29 October was not prepared to provide any further material on the matter because he had only seen the wife once, and that the wife’s usual doctor was unable to provide a report in time for the hearing on 10 December. Attached to that Affidavit was the original medical certificate provided for the wife on 29 October.

8. Also on 10 December 2012, the principal lawyer for the wife filed an Amended Application in a Case and a supporting Affidavit saying that he was concerned about the wife’s mental state to the extent that he sought a case guardian for her pursuant to Rule 11.11(1) of the Federal Magistrates Court Rules 2001 (as they then were).

9. On 10 December 2012, the matter was adjourned to the duty list of the court on 30 January 2013 and the husband’s costs of 10 December 2012 in the sum of $3,250.00 were fixed and reserved.

10. Consent orders were made on 30 January 2013 before Federal Magistrate Riethmuller (as he then was) to the effect that the wife attend upon Dr S for the purposes of a psychiatric report, as the wife had not been assessed pursuant to her application for a case guardian.

11. The wife attended upon Dr S on 1 March 2013 and his report, dated 25 March 2013 and attached to an Affidavit, was filed on 17 April 2013.  The report stated that Ms Mitchell was not suffering from a mental illness despite displaying some depressive symptoms, and that she was capable of work, if only part-time at the moment.

12. On 12 April 2013, the husband filed an Application in a Case seeking an order that the wife remove a caveat she had placed over the former matrimonial home which was, is and always has been registered in the husband’s sole name.

13. Orders to that effect were made by consent on 15 April 2013, with the proviso that if the wife did not remove the caveat by 4:00pm on 19 April 2013, an order under s.104A of the Family Law Act 1975 (“the Act”) would come into effect allowing a Registrar of this court to sign the necessary documents.

14. The wife did not remove the caveat and the s.104A order was invoked to effect the removal.

15. The trial of this matter took place on 27 June 2013, with the wife appearing in person and being assisted by a [omitted] interpreter.

16. At trial, the wife told the court that she would remove the caveat when the husband paid her $60,000 in settlement of the proceedings and that she believed that she was not obliged to remove it before then.

17. The wife was apprised of her obligation to comply with court orders, but as the caveat had already been removed (much to the wife’s surprise), no further action was taken in relation to that issue.

18. At trial, she blamed her lack of knowledge about her legal obligations on both her (then) lawyer and the interpreter who had assisted her on 15 April, saying that she had not interpreted any such obligation to her.

The Law

1. The law in relation to marital property settlements is found in Part VIII of the Act. More particularly, it is to be found in s.79 and, by reference in s.79(4), in s.75(2).

2. The process by which consideration of appropriate orders to be made under s.79 ought to be approached by the court is set out clearly in the High Court decision of Stanford v Stanford (2012) 293 ALR 70 (“Stanford”), and I here set out what the High Court said about that process (at paragraphs 35 to 40).

   35. It will be recalled that s79(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 subsections are not to be conflated. In every case in which a property settlement order under s79 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.

3. In this case, the property pool consists of the former matrimonial home at [G], which is, and always has been registered, in the sole name of the husband, a motor vehicle which is also registered in the husband’s sole name, and a bank account, again in the husband’s sole name, with a balance of about $1,000. The question of any equitable interest the wife may have in any of that property is addressed later in these reasons.

4. The High Court went on to say:

   38. Second, 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 (1956) 98 CLR 228 (at 231-2), 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 (1976) 136 CLR 248 (at 257) 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 and 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” (Hepworth v Hepworth (1963) 110 CLR 309 at 317). 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” (Hepworth at 317). The question presented by s 79 is whether those rights and interests should be altered.

   40. Third, whether making a property settlement order is “just and equitable” is not 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” (Watson at 257). 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.

5. When these “three fundamental principles” are applied to the facts of this case, I interpret the High Court to be saying that the wife would have to show that she has an equitable interest in the husband’s property before the court could be satisfied that it is just and equitable under s.79(2) to alter the husband’s current legal entitlements to the real property, the motor vehicle and the bank account.

6. Equitable interests in real property usually arise through trust arrangements, whether express or implied or imposed by law.

7. There is no evidence before the court of an express trust having been executed in this matter.

8. If the wife seeks to prove a constructive trust, she would need to show:

   ·that she had acted to her detriment in reliance on a promise made by the husband such that it would be unconscionable for the husband to deny that he holds the property on trust for himself and her[1].

   or

   ·that she and the husband had engaged in a joint enterprise that had failed and that it would be unconscionable for the husband to deny that he holds the property on trust for himself and her[2]  

   or

   ·that there was a common intention between the parties that the property was to be jointly owned.

   [1] Muschinski v Dodds (1985) 160 CLR 583; Calverley v Green (1984) 155 CLR 242; Giumelli v Giumelli (1999) 196 CLR 101; Friar & Friar [2011] FamCAFC 71.

   [2] Baumgartner (1987) 164 CLR 137

9. The authorities in relation to constructive trusts between domestic couples are almost without exception in relation to situations where the putative beneficiary has made financial contributions to real property.

10. The wife said several times in evidence that the husband had made promises to her and that that was why she had left her home country, her family and her job to come to Australia to live with the husband as his wife. She said, in effect, that she had acted to her detriment in doing so, as she does not speak very much English, has no prospect of work in Australia, and she is now living a very long distance from her family supports.

11. She did not specify what those promises were, either in Affidavit material or in oral evidence, but in the context of conceding that she had not made financial contributions to the property, she said words to the effect that “if you’re married, then what’s mine is his and what’s his is mine”.

12. Unfortunately for the wife, that statement does not represent the law in Australia.

13. In this case, there is no evidence that the parties were engaged in a “joint enterprise” other than the marriage itself, as the wife did not make any financial contributions to any part of the property.

14. In relation to the common intention issue, White J in Shepherd v Doolan [2005] NSWSC 42 at [37] said:

    … A common intention that a party have a beneficial interest in a property owned by another will not be inferred merely from their joint occupation of the property, nor the carrying out of household duties, nor the bringing up of children on the property, nor the doing of repairs, renovations, maintenance, decoration or improvement, nor the provision of furniture.

1. On that basis, I note that there is no evidence before the court, either in documentary or oral evidence form, of a common intention between the parties that the husband would hold his interest in his property on trust for the wife and himself.

2. In this case, the parties were married for less than 4 years. The wife made no financial contributions to the property at all. Her contributions were solely of the non-financial variety.

3. The parties actually cohabited (thus providing opportunity for the wife to make non-financial contributions to the property itself) for about 3 years and 4 months of the marriage.

4. In those circumstances, and in the absence of any evidence as to alleged promises that the property would be jointly owned, or that the wife made any payments of any kind to the property, I cannot find on the balance of probabilities that there was a constructive trust in relation to the real property, the motor vehicle or the husband’s bank account.

5. To prove a resulting trust, the wife would have to show that she had made payments to the maintenance or improvement of the property before the date of its acquisition[3].

   [3] See comments made by the court in  Crafter and Ors and Crafter and Ors [2012] FamCAFC 199 at paragraph 147

6. Again, there were no payments made by the wife to the improvement or maintenance of the property during the marriage, or indeed, at any other time, all the property having been owned by the husband before the marriage took place.

7. I therefore find that there was no resulting trust which would confer an equitable interest on the wife.

8. On the evidence before me, I find that there was no implied, constructive or resulting trust in relation to the husband’s property pursuant to which he can be said to hold any part of that property on trust for the wife, and I therefore find that the wife holds no equitable interest that would allow the court to disturb the current legal title to the [G] property, to the husband’s motor vehicle, or to his bank account.

9. Having now considered the process set out by the High Court in Stanford, I cannot be satisfied that it is just and equitable to make an order under s.79(4), and I therefore dismiss the wife’s application.

10. However, were I to be in error in that decision, I would find that the wife’s entitlement under s.79(4) would be in the order of approximately 15% of the asset pool based on the length of the marriage, her non-financial contributions and comparative needs under s.75(2).

11. That would mean that the husband would have to give her a payment of some $28,950.00 in order to settle the property issues between them.

12. I have found that she has already received the sum of at least $28,000.00, and perhaps $33,000.00, from the sale of the husband’s [omitted] licence.

13. In addition, she has obligations to pay the husband costs awarded by the court of some $7,200.00. While counsel for the husband set out further costs the husband has been put to and thrown away in the course of the proceedings, she made no application for an order in relation to the payment of those costs, and so I consider the liability of the wife to be limited to those costs ordered by the court.

14. Counsel for the husband submitted that any payment to the wife under s.79 should be offset by the costs awarded, and did not seek actual payments of those costs, recognising that the wife is simply not in a position to pay them. I accept that submission, and would discount the wife’s payment by the payments she has already received and the amount of the costs so far awarded.

15. That would leave the wife, on her best case, with a debt of some $6,250.

16. In all of these circumstances, I am not satisfied that it would be just and equitable to make an order under s.79(1) and therefore dismiss the wife’s Application.

I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of Judge Small

Date:  12 July 2013