Montana and Toth
[2019] FCCA 654
•15 March 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MONTANA & TOTH | [2019] FCCA 654 |
| Catchwords: FAMILY LAW – De Facto property settlement – contributions. |
| Legislation: Family Law Act 1975, ss.90SF, 90SM |
| Cases cited: Stanford v Stanford (2012) FLC 93-518 Bevan & Bevan [2013] FamCAFC 116 |
| Applicant: | MS MONTANA |
| Respondent: | MR TOTH |
| File Number: | MLC 3126 of 2016 |
| Judgment of: | Judge Small |
| Hearing date: | 7 June 2018 |
| Date of Last Submission: | 7 June 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 15 March 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Gardiner |
| Solicitors for the Applicant: | Freeman Family Law |
| Counsel for the Respondent: | Self-represented |
| Solicitors for the Respondent: | Self-represented |
ORDERS
The Applicant shall retain the real property situated at and known as Property A, in the State of Victoria (“the Property A property”), and shall forever indemnify the Respondent against any liability whatsoever in relation to the Property A property.
The Applicant shall also retain:
(a)the Motor Vehicle B in her possession; and
(b)The monies paid to her by way of partial property settlement pursuant to the Orders of 7 June 2018.
The Respondent shall retain the following items of property:
(a)the proceeds of sale from the property situated at and known as Property C in the State of Victoria;
(b)his Motor Vehicle D motor vehicle;
(c)his Motor Vehicle E motor vehicle;
(d)his work van, tools and equipment;
(e)the furniture and chattels which were at the property at Property F, (“the Property F property”) when he vacated that property; and
(f)the monies paid to him by way of partial property settlement pursuant to the Orders of 7 June 2018.
Within 30 days of the date of these Orders, the monies held in trust for the parties by the Applicant’s solicitors as a result of the sale of the Property F property shall be distributed such that the Applicant receives 45% (forty-five per cent) of the total net assets of the parties and the Respondent receives 55% (fifty-five per cent).
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders.
(b)subject to the provisions of paragraph (4) hereof, monies standing to the credit of the parties in any joint bank account are to be divided between the parties in the proportion of 45 per cent to the Applicant and 55 per cent to the Respondent;
(c)insurance policies remain the sole property of the owner named thereon;
(d)each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;
(e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed; and
(f)each party forgoes any claim they may have to any inheritances to which the other party is entitled to either presently or in the future.
IT IS NOTED that publication of this judgment under the pseudonym Montana & Toth is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 3126 of 2016
| MS MONTANA |
Applicant
And
| MR TOTH |
Respondent
REASONS FOR JUDGMENT
Introduction
This is a property matter arising from the breakdown of the relationship between Ms Montana (“the Applicant” or “Ms Montana”) and Mr Toth (“the Respondent” or “Mr Toth”).
The Applicant seeks orders that she be paid the sum of $252,000.00 from the proceeds of sale of the parties’ property at Property F, (“the Property F property”), now held in trust on behalf of the parties, and the Respondent receive the balance. She also seeks an order that the parties otherwise retain all other assets in their respective possessions and indemnify the other with respect to any liabilities encumbering any asset they retain.
The Respondent seeks an order for a 50/50 split of the property pool.
Therefore, the issues to be decided in this matter, are, as in any property dispute:
(a)Is it just and equitable to alter the parties’ property interests?
(b)If it is just and equitable, what are the property interests of the parties and what is their value?
(c)What were the parties’ contributions to the property?
(d)Should there be an adjustment to the contribution-based entitlements of the parties after a consideration of the matters set out in s.90SF(3) of the Family Law Act 1975 (Cth) (“the Act”)?
(e)In light of the above findings, what Orders should be made to effect a just and equitable division of property between the parties?
Background
The Applicant is 34 years of age, having been born on … 1984. She is in good physical health but suffers from anxiety and depression from time to time.
The Respondent is 39 years of age, having been born on … 1979. He described some emotional difficulties at trial, referring to himself as having become “unstable” as a result of the breakdown of the relationship.
The parties commenced a relationship in late 2001 when the Applicant was 17 and the Respondent 21.
They apparently began to live together in 2006 at the home of the Respondent’s mother, before moving into the Respondent’s unit at Property C, (“the Property C property”) in 2007. Mr Toth had purchased that property in 1999.
In … 2009 the applicant purchased the property at Property A (“the Property A property”) which was registered in her sole name. That property was rented out until about December 2013 when the parties began to renovate it. The Property A property has not been occupied since December 2013.
In … 2011 the parties purchased the Property F property which was registered in their joint names. The parties renovated that property over approximately the next year or before vacating the Property C property and moving into the Property F property.
The property was then let until January 2016 when the Respondent sold it.
The parties separated in mid-2015 when the Applicant left the Property F property to reside with her parents.
There are no children of the relationship.
Procedural History
These proceedings commenced with Ms Montana filing an Initiating Application and Financial Statement on 12 April 2016 in the Family Court of Australia.
The matter was listed for a Case Assessment Conference on 28 June 2016. However, there was no appearance for the Respondent, and it was re-listed for 7 September 2016 with procedural orders being made.
On 2 September 2016, Ms Montana filed an Amended Initiating Application, an Affidavit in Support, the Affidavit of Graeme Freeman (her solicitor) and an Affidavit of Attempted Service.
Mr Toth filed a Response, Affidavit in Support and sworn Financial Statement on 28 November 2016.
The parties attended a Conciliation Conference on 14 December 2016 but the matter was not resolved.
Ms Montana filed an Application in a Case and Affidavit in Support on 26 April 2017 seeking Orders for the sale of the Property F property and for a partial property settlement of $100,000 to be paid to each party from the sale proceeds. If the Respondent failed to comply with the order for sale, Ms Montana sought an order that the property be transferred to her for sale, and an order that a Registrar of the Court sign all relevant documents on behalf of Mr Toth.
On 22 May 2017, the Respondent’s solicitors filed a Notice of Withdrawal.
On 26 May 2017, Orders were made by consent before Registrar Field for the sale of the Property F property and the matter was transferred to the Federal Circuit Court of Australia. Pursuant to those Orders, the proceeds of sale of the Property F property were to be held in trust for the parties in the trust account of the Applicant’s solicitors.
Ms Montana filed a further Application in a Case and Affidavit in Support on 5 July 2017, seeking enforcement of the Orders made by consent on 26 May 2017.
The matter first came before me on 22 August 2017 in the Duty List at Melbourne. I listed the matter for Final Hearing on 31 May 2018 for a 2 day trial which was later re-listed to 7 June 2018.
The Applicant filed her Trial Affidavit and an updated sworn Financial Statement on 23 May 2018, and an Outline of Case Document and a sworn valuation in relation to the Property A property on 5 June 2018.
The Respondent filed no material for Trial.
The matter came before me for Final Hearing on 7 June 2018 and ran for 1 day. The only witnesses were the Applicant and the Respondent and both underwent cross-examination.
On 7 June 2018, at the end of the trial, I made Orders that provided for each of the parties to receive a partial property settlement of $75,000 from the sale proceeds of the Property F property, which are held in trust for the parties by the Applicant’s solicitors.
I otherwise reserved my decision.
Issues and Evidence
It is not possible to refer to every fact and/or matter raised in the trial of these proceedings and nor is it necessary to do so. The parties should understand that I have had regard to the whole of the evidence, including filed Affidavits, my notes and the transcript of the trial on 7 June 2018, and if I have not referred to a particular fact or matter it does not mean that I have not considered it.
(a) Is it just and equitable to alter the parties’ property interests?
This question arises from the operation of s.90SM(3) of the Family Law Act 1975 (Cth) (“the Act”), which states that a Court may only make orders altering the property interests of parties to a de facto relationship if it is just and equitable to do so.
In Stanford v Stanford[1] the High Court of Australia considered the requirements of s.79(2) of the Act, which refers to married parties but is otherwise identical in its terms to s.90SM(3). Their Honours stated, at paragraph 42:
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.
[1] Stanford v Stanford (2012) FLC 93-518.
In Bevan & Bevan [2013] FamCAFC 116, the Full Court of the Family Court of Australia said that the circumstances described in that passage of the Stanford judgment “encapsulate the vast majority of cases”[2] .
[2] Bevan & Bevan [2013] FamCAFC 116 paragraph 70.
In this case, the parties lived together and acquired property which, because of their separation, can no longer be jointly enjoyed. There is nothing in the circumstances of the present case which would remove it from the category of “the vast majority of cases” coming before this Court, and therefore I find that it is just and equitable to consider making Orders that would alter the parties’ property interests.
(b) If it is just and equitable, what are the property interests of the parties and what is their value?
At the time of trial the property interests of the parties may be set out as follows:
Assets
Owner
Valuation
Proceeds of sale from Property F (“the Property F Property”)
Joint
$395,243[3]
The property at Property A (“the Property A Property”)
Applicant
$365,000[4]
Proceeds of sale from Property C (“the Property C property”)
Respondent
$155,000
Motor Vehicle B
Applicant
$2,000
Motor Vehicle D
Respondent
$50,000
Motor Vehicle E
Respondent
$20,000
Work van, tools and equipment
Respondent
$7,000
Furniture and chattels in the Property F property
Joint
$10,000
Total assets
$1,004,243
Liabilities
Mortgage over the Property A property
Applicant
$208,000
Net assets excluding superannuation
$796,243
Superannuation
Super Fund G
Applicant
$110,000
Super Fund H
Respondent
$17,000
Total Superannuation
$127,000
Net assets including superannuation entitlements
$923,243
[3] Figure provided by counsel for the Applicant at trial. This figure includes the $75,000.00 paid to each party pursuant to orders made on 7 June 2018.
[4] Sworn valuation provided by Mr J of … Valuers Pty Ltd dated 11 May 2018.
(c) What were the parties’ contributions to the property?
This question is mandated by s90SM(4) of the Act, which states:
In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) 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 de facto relationship 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 de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) 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 de facto relationship or either of them; and
(c) the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, 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 de facto relationship; and
(e) the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
Initial contributions
At the commencement of the parties’ cohabitation in 2006, the Applicant deposes that she did not have any savings and held superannuation entitlements of about $3500.
She says that the Respondent was the registered proprietor of the Property C property, in which he held “a small equity as it was subject to a significant mortgage”[5].
[5] The Trial Affidavit of the Applicant sworn 23 May and filed 25 May 2018 paragraph 7.
Both parties were working full-time, and, the Applicant deposes, their incomes were similar at that time[6].
[6] Ibid paragraph 6.
The Respondent deposes, in his only affidavit filed in these proceedings[7], that at the time of cohabitation he had approximately $7,000 worth of savings, and $5,000 worth of superannuation entitlements. He says that he and the Applicant “initially lived off my savings”[8], although given that he and she were working at the time, it is difficult to see why that would have been necessary.
[7] The Affidavit of the Respondent sworn 25 November and filed 28 November 2016
[8] Ibid paragraph 15(a).
It is his evidence that he had purchased the Property C property in … 1999 for approximately $75,000 with a mortgage loan of approximately $67,000 being obtained from the … Bank. He does not say how he met the remainder of the purchase price.
Mr Toth denies that Ms Montana was working at that time and says she had no superannuation. He deposes that he was working full-time as a tradesman. I note that it was Ms Montana’s evidence at trial that she had been working for her current employer for 15 years, which indicates that she was working when the parties began living together in 2006.
It is Mr Toth’s evidence that he “was always solely contributing to the mortgage repayments, bills and outgoings associated with my apartment”[9].
[9] Ibid paragraph 15(c).
In opening his client’s case at trial, Mr Gardiner, Counsel for the Applicant, submitted that the contributive value of what little equity Mr Toth held in the Property C property at the date of cohabitation had diminished “with the effluxion of time”. That is, that his initial contribution to the parties’ overall property had been “balanced” to a significant degree by the contributions of the Applicant over the eight or nine years of the relationship.
While that may be so in general, the principle enunciated in Pierce & Pierce[10] does not entirely extinguish the Respondent’s greater contribution at the commencement of the parties’ cohabitation in the form of his interest in the Property C property. That is particularly so when there is evidence before the court that equity in the Property C property was later used to pay the deposit on the Property F property.
[10] Pierce & Pierce (1998) FLC 92-844
I therefore find, on the balance of probabilities, that the Respondent’s initial contributions to the parties’ property pool were somewhat greater than those of the Applicant, although without the advantage of retrospective valuations it is impossible to quantify those initial contributions.
Contributions during the relationship
The parties’ respective contributions during the relationship were a source of considerable dispute at trial.
It is essentially the Applicant’s evidence that during the relationship both parties were working and both applied their financial resources and personal labour to acquiring, maintaining and improving their property.
She describes an agreement between the parties whereby, in the early years of the relationship, the Respondent paid the mortgage on the property and she paid for almost all other costs, including rates, utilities and food.
It is her evidence that she was the primary homemaker, performing the vast majority of the cooking, cleaning and washing tasks.
When she purchased the Property A property in 2009, she says she paid the mortgage loan secured by that property while Mr Toth continued to pay the mortgage loan on the Property C property.
When the parties purchased the Property F property in 2011 they opened a joint bank account and, Ms Montana says, they paid their wages into that account, which is the account from which the Property F mortgage payments were transferred to the parties’ mortgage loan.
It is her evidence that the parties jointly paid for the renovations undertaken on the Property A and Property F properties.
Ms Montana says that the only exceptions to that arrangement were that her father contributed a net amount of about $18,000 to the purchase of the Property A property, and that Mr Toth’s parents had given the parties about $30,000 or $40,000 towards the purchase of the Property F property.
In his Affidavit, Mr Toth deposes that he made the greater contributions to the parties’ property because he earned more than Ms Montana during the relationship and had put more physical labour into renovations to the Property A and Property F properties.
I note in that regard that Ms Montana says that while both parties were working full-time, it was she who earned the greater salary, but, as will become clear, my approach in property proceedings is not to interrogate the evidence to that level of detail.
Much of Mr Toth’s Affidavit consists essentially of minutely detailed lists of renovation tasks undertaken on the Property F and Property A properties, and the particular monies expended on them.
It is his evidence that he had made all mortgage payments on the Property C and Property F properties, and states that “(a)lthough the Former Matrimonial Home (sic) was purchased in our joint names, Ms Montana did not contribute any monies towards its purchase”.
Under cross-examination at trial he was forced to concede that under the agreement between him and Ms Montana, he had paid for the mortgage and she had paid for almost every other cost of the parties living together, including rates, utilities, food, and other expenses.
Mr Toth does concede that later during the relationship he “began to pool my savings account with Ms Montana’s and we both contributed towards the mortgage, bills and outgoings associated with the Former Matrimonial Home (sic)[11]”.
[11] The affidavit of the Respondent sworn 25 November filed 28 November 2016 paragraph 16(f)
Nevertheless, in his cross-examination of the Applicant at trial, Mr Toth appeared determined to show that mortgage and other payments which came from his account were contributions by him alone. He seemed fixated on the minutiae of what each party had contributed, to the extent that he asked Ms Montana to confirm that he had paid for a mowing service, that he had been “the better cook in our house”, and that he had upgraded his power tools each year.
As I explained to Mr Toth during the trial, that is not how the Family Law Act 1975 (Cth) operates.
According to the authorities[12], the question of contributions is rarely one to be answered by finely detailed examination of parties’ earnings and expenditure. As a general rule, and unless there is specific evidence to the contrary, such as the contribution to the joint property, of an inheritance, or the sale proceeds of a previously-owned item of property the contributions of the parties are often considered to have been equal during the period of cohabitation.
[12] For example Hayne & Hayne [1997] FLC 90-265; Garrett & Garrett [1984] FLC 91-539; In the Marriage of Quinn (1979) FLC 90-677
That is because de facto relationships and marriages are partnerships, and where both partners are either working and bringing income into the relationship, or are caring for the household and/or a child of the relationship, those are all significant and qualitatively equal contributions to the partnership.
I approach this case on that general principle, while being mindful that there have been financial contributions from both parties’ parents and, on the Respondent’s part, from a previously-owned property.
It became clear early on the day of trial that Mr Toth did not consider the Property C property (or more correctly the proceeds from its sale) to be part of the property to be divided between the parties, as he had owned the property prior to the relationship’s commencement.
He was quickly disabused of that view, as the first task for a trial judge in a family law property case, after the decision as to whether it is just and equitable to alter the parties’ property interests at all, is to determine and describe all the property in which the parties have a legal or equitable interest at the time of trial and to determine the value of that property.
That property clearly includes the proceeds of sale of the Property C property, which Mr Toth sold in January 2016, after the parties had separated. Mr Toth retained the net sum of $155,000 from those sale proceeds.
It is Mr Toth’s evidence that he had borrowed $80,000 from his parents which was applied to renovations at the Property F property[13], and that he had remortgaged the Property C property in the sum of $65,000 to pay the deposit on the Property F property, that refinancing bringing the Property C mortgage liability to $120,000.
[13] The affidavit of the Respondent sworn 25 November 2016 filed 28 November 2016 paragraph 16(h).
It was his evidence that he had paid his parents back their $80,000 from the sale proceeds of the Property C property.
However, at trial, the Respondent said that his parents had paid the deposit on the Property F property purchase in the sum of $52,000, and he was quite insistent about that fact. This was only one of many contradictory statements made by Mr Toth at trial.
It was Ms Montana’s evidence at trial that the funds received from Mr Toth’s parents were in the form of a gift rather than a loan, and that those funds amounted to about $30,000 or $40,000.
There is no evidence before the court, either in the form of a loan agreement, or affidavit evidence from his parents, to support Mr Toth’s claim in that regard. As the asserter of that fact (that is, that he borrowed $80,000 from his parents which was repaid from the sale proceeds of the Property C property), the onus is on Mr Toth to prove that fact on the balance of probabilities.
In my view, he has failed to prove anything more than that the parties received a significant sum of money from his parents when the parties purchased the Property F property, and that that is an indirect financial contribution to the parties’ property on his part.
Similarly, Ms Montana’s evidence is that her father contributed the net sum of $18,000 to the purchase of the Property A property, and that is an indirect contribution to the parties’ property on her part.
What is clear is that Ms Montana never saw any of the funds realised from the sale of the Property C property. Indeed it is Ms Montana’s evidence that she was unaware that Mr Toth had sold the Property C property until after the event.
At trial, it was the Respondent’s evidence that he had used the deposit paid by the purchasers of the Property C property, a sum of $21,000, towards his living expenses, including, he said, mortgage payments on the Property F property of $2,200 per month.
However, his evidence in relation to how the mortgage loan attached to the Property F property had fallen into arrears in the sum of $15,796 by September 2017 was all but incoherent.
At this stage in these Reasons for Judgment I feel constrained to address the demeanour of the Respondent at trial.
He presented in a heightened emotional state, with some pressured speech, and he was volatile and erratic, at times speaking incoherently and at other times laughing inappropriately. He became emotional at times and I had to ask him multiple times not to interrupt me, Ms Montana, or her counsel. Indeed on one occasion I told Mr Toth that if he interrupted again I would ask him to leave the court room.
He appeared defensive, aggressive and sometimes petulant when both answering and asking questions, and several times he made statements displaying either disturbed thinking or an immaturity which does him no credit. For instance, Mr Toth had always claimed that he wanted an equal division of the parties’ property. However, when I put to him that what he had been saying indicated that he was actually asking for more than half of the parties’ property, he said the following:
Okay, well then if it’s 50 per cent and that’s fair, what Ms Montana is receiving then maybe let’s swap. Let her just get the 150 and I will get the unit and, like, I mean, come on.
On another occasion, during a discussion between the bench and the bar table about possible settlement options, Mr Toth said:
What happens to me. I’m just going to throw myself off a bridge then. She can have it all then.
I don’t want anything. What happens to me? I work hard.
It was extremely difficult to elicit coherent evidence from him through much of his time in the witness box, and at various times during the day he said that he had an employment contract with Employer, that he needed money from the proceedings to buy businesses and that he had a business.
He denied having been violent towards Ms Montana during the relationship, saying that he was simply a “passionate” man who expressed his feelings freely. He told Counsel for the applicant that his raised voice on the day of trial was simply an expression of his “passion”.
If Mr Toth’s presentation on the day of trial was typical of his presentation throughout the relationship, it is difficult to discount Ms Montana’s evidence that he verbally abused her, pulled her hair, and spat at her when he was angry.
At one stage during his cross-examination, Counsel for the applicant asked the Respondent if he was still using the drug “Ice”[14] Mr Toth denied that saying: “Your Honour, it has been years”. However, later in his cross-examination, he conceded that he had continued to use drugs, and specifically “Ice”, after Ms Montana had stopped. When asked if he was a heavy user the Respondent replied:
Let me explain. I – I was into music and stuff. I – I am – I was – and I still am a … and on Thursday nights I would – I would go there to get extra hours of the day and I would do my work. And – and she knows. I would spend hours in my work and that – that’s all I did. I wasn’t out on the streets. I needed – I needed time to – to be, Mr Gardener (sic in Transcript).
[14] It is common ground between the parties that they both took illicit drugs during the relationship, including Ice, although Ms Montana’s evidence was that she had stopped using by the end of the relationship, and it was Mr Toth’s continued use which had caused the breakdown in their relationship.
It was his evidence that he had not applied for Centrelink benefits because he “didn’t want to be a burden on the community”, despite not working essentially since the separation.
When asked why he had not been able to work, Mr Toth said that he had been “very unstable”, “broken” and “shattered”, and that he lived with anxiety and depression. When asked if he was receiving treatment for those conditions he said that he was seeing a psychologist, but that he did not take medication, saying: “I don’t like prescription medications. It’s not good for you”.
The Respondent’s presentation on the day of trial made it very difficult to make sense of his evidence, and I have re-read that evidence several times in transcript, but as far as I can tell, the above paragraphs essentially summarise his case in so far as his contributions during the relationship are concerned.
When I consider all the written and oral evidence about contributions made by the parties during the relationship, I find that those contributions fall in Mr Toth’s favour, as he used the equity in his previously-owned Property C property to secure the purchase of the Property F property, and his parents made a higher contribution to the parties’ properties than did Ms Montana’s father.
Post-separation contributions
At separation in mid-2015, Ms Montana left the Property F property and went to live with her parents nearby. She continued to make the mortgage repayments on the Property A property, which at the date of separation had been untenanted for approximately 18 months. At the time of trial, before the partial property settlement of $75,000 was made to each party, it required further renovation to be habitable.
It is the Applicant’s evidence that she also paid her share of the Property F mortgage for the first five or six months after separation.
Mr Toth remained living in the Property F property, making mortgage repayments on that property until its sale in 2017, although, as I have noted above, the mortgage was in arrears at the time of the property’s sale.
The Property F property had been valued at over $1 million in 2016. It ultimately sold for $875,000 approximately one year later.
It is Ms Montana’s evidence that Mr Toth had allowed the property to fall into disrepair after the date of separation, and that its ostensible fall in value was due to his neglect, and to some damage to the property caused by a fire in the period between the contract of sale being signed and settlement. It was the evidence of both parties that they had been forced to lower the sale price by $50,000 as a result of a fire which occurred at the property after the contract of sale had been signed.
Mr Toth’s evidence at trial was that he had never believed that the 2016 valuation of the Property F property was valid – that is that the property had ever been worth over $1 million – and he denied causing damage to or neglecting the property after separation.
He did say that he had spent almost $7000 “getting that place back to scratch” in preparation for sale, and he specifically denied being in any way involved in the fire which damaged the Property F property after the contract of sale was signed.
The coincidence in the timing of the fire, and of significant damage caused to the Property A property after the parties’ separation, led Ms Montana to believe that Mr Toth was responsible for both.
However, while Mr Toth was interviewed by the police in relation to the Property F fire, he was never charged with any offence in relation to it, and there is no independent evidence to link him to the damage to either property.
I note that the cost of all valuations of property filed in these proceedings was met by Ms Montana, but I do not consider the payment of those costs to have been incurred in the “acquisition, maintenance or improvement” of the properties.
In all of those circumstances, I find that the post-separation contributions of the parties to their properties fall slightly in favour of Ms Montana because of her continued payment of the whole of the mortgage over the Property A property from the date of separation to the date of trial and her part payment of the Property F mortgage for the first five or six months after separation.
In overall terms then, I find that the contributions of the parties to the acquisition, maintenance and improvement of their property fall 55% to the Respondent and 45% to the Applicant.
(d) Should there be an adjustment to the contribution-based entitlements of the parties after a consideration of the matters set out in s.90SF(3) of the Family Law Act 1975 (Cth) (“the Act”)?
Section 90SF(3) of the Act sets out the factors the Court must take into consideration when making orders for the maintenance of a party to a de facto relationship.
The inclusion of this exercise in de facto property proceedings is required by s.90SM(4)(e) (see paragraph 35 above).
Section 90SF(3) of the Act states that the court must consider the following matters when deciding whether to further alter property interests of parties [15]:
[15] I have omitted sub-sections which do not apply to these parties
(a) the age and state of health of each of the parties; and
(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; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) 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; and
(g) a standard of living that in all the circumstances is reasonable; and
(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; and
(i) 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; and
(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; and
(k) the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party’s role as a parent; and
(m) if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(q) any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.
In this case, the parties are of similar age and state of physical health.
The Applicant is working, although the Respondent has had some periods of unemployment, and there is some evidence that his mental health has been less than optimum in recent years. It was his evidence at trial that he had somewhat recovered and expected to return to work once this property settlement is concluded.
There is no evidence before the court that either party lacks the capacity for gainful employment in the future.
Each of the parties will leave these proceedings with a real property, or the proceeds of sale from one, their motor vehicles, cash, various other items of property, and their superannuation entitlements.
There is a considerable discrepancy between the parties’ superannuation entitlements.
Counsel for the Applicant submitted at trial that the reason for the discrepancy is that the Respondent, who was essentially self-employed during the relationship, had chosen not to make payments to his superannuation fund. Counsel submitted that therefore, there should not be a superannuation split of his client’s entitlements, as there might otherwise be, as the Respondent had chosen to spend his money otherwise than in providing for his future.
During the trial, Mr Toth stated several times that he had considered his property portfolio to be his “superannuation”, and he was most affronted at the idea that it had been taken away from him.
In those circumstances, where Mr Toth could have contributed to his superannuation fund and chose not to do so, I see no reason why Ms Montana should be penalised for that decision.
I concur with Counsel on that issue, and will not make an order for a superannuation split as between the parties, as, pursuant to s.90SF(3)(r), I do not consider that such a split would be just and equitable.
Each should ultimately be able to provide him/herself with a standard of living similar to that which pertained during the relationship.
However, I note that there is nothing in the Act, or in the decided cases, that states that a party should leave a de facto relationship in a similar or better financial position than when the relationship began.
Neither has a child to support and neither is responsible for the support any other person.
Both parties worked throughout the relationship, and its duration of some nine years has affected neither party’s earning capacity.
In those circumstances, I do not see any reason to adjust the parties’ property on the basis of the matters set out in s.90SF(3), and I note that that was the submission of the Applicant’s counsel.
(e) In light of the above findings, what Orders should be made to effect a just and equitable division of property between the parties?
The Applicant seeks to retain the Property A property, her superannuation entitlements, the $75,000 she has already received, and a payment from the funds held in trust from the sale of the Property F property of $252,000.
The Respondent seeks an equal division of the overall property.
I have found that because of the Respondent’s greater contributions to the parties’ property, he should receive 55% of the net assets available for distribution between the parties, plus his superannuation entitlements.
However, some of those assets are in the form of funds in banks, and those funds will have accrued interest and incurred bank fees in the time between the trial and the delivery of this judgment.
In those circumstances, I will make orders for the Applicant to retain the following assets and liabilities from the parties’ joint property pool:
· the Property A property subject to its mortgage, leaving equity worth $157,000;
· her Motor Vehicle B worth $2,000;
· the $75,000 she received as a result of the orders of 7 June 2018;
· such payment from the proceeds of sale of the Property F property that results in her receiving 45% of the parties’ net assets, which, by my calculations on the figures available at trial, would be $124, 309 (plus a share of interest accrued minus bank fees incurred since 7 June 2018), and
· her superannuation entitlements.
The Respondent will retain:
· the proceeds of sale from the Property C property worth $155,000;
· his Motor Vehicle D worth $50,000;
· his Motor Vehicle E worth $20,000;
· his work van, tools and equipment worth $7,000;
· the furniture and chattels from the Property F property worth $10,000;
· the $75,000 he received as a result of the orders of 7 June 2018;
· such payment from the proceeds of sale of the Property F property that results in him receiving 55% of the parties’ net assets, which by my calculations on the figures available at trial, would be $120,934 (plus a share of interest accrued and minus bank fees incurred since 7 June 2018); and
· his superannuation entitlements.
The exact amounts to be received by each party from the sale proceeds of the Property F property will need to be calculated once a settlement date is determined. Mr Toth indicated at trial that his accountant was assisting him to manage his finances, and it would be in his interests to allow his accountant to undertake the task of determining the exact cash payment to be made to him in consultation with Ms Montana’s lawyers.
Conclusion
The settlement set out above will allow both parties to move on with their lives with some security.
It is to be hoped that Mr Toth’s psychologist will have been able to assist him to overcome, or at least to manage his emotional difficulties so that he can live the life he wants to live, and have the security he desires.
Ms Montana will have the means to complete the renovations to the Property A property and, perhaps, to reduce its mortgage so that she too can have security for the future.
I certify that the preceding one hundred and twenty-eight (128) paragraphs are a true copy of the reasons for judgment of Judge Small
Date: 15 March 2019
Key Legal Topics
Areas of Law
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Family Law
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Property Law
Legal Concepts
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Remedies
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Costs
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Injunction
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