Morwood and Morwood
[2014] FCCA 2079
•24 September 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MORWOOD & MORWOOD | [2014] FCCA 2079 |
| Catchwords: FAMILY LAW – Property – long marriage – adult children – presumption of advancement – s.106B of the Family Law Act 1975 (Cth) – partial payment out to husband’s adult children – windfall sale price – husband’s prior contribution of farming land – s.75(2)(o) of the Act matters – justice and equity of orders. |
| Legislation: Family Law Act 1975 (Cth), ss.75(2)(o), 106B |
| Sebastian v Sebastian (No.5) [2013] FamCA 191 |
| Applicant: | MS MORWOOD |
| Respondent: | MR MORWOOD |
| File Number: | CSC 527 of 2012 |
| Judgment of: | Judge Hartnett |
| Heard at: | Cairns |
| Hearing dates: | 2, 3, 5 and 6 June 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 24 September 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Baston |
| Solicitors for the Applicant: | Miller Harris Lawyers |
| Counsel for the Respondent: | Mr Jacobs |
| Solicitors for the Respondent: | Murray Lyons |
ORDERS
The husband pay to the wife the sum of $790,591 within 60 days hereof. In the event of any default in respect of part or all of this sum, the husband is to pay an interest amount in addition calculated by reference to r.17.03 of the Family Law Rules 2004 (Cth).
The wife retain and/or receive as her absolute property all her right, title and interest to and in the following:-
(a)the funds held in the wife’s bank accounts, including the funds held on her behalf by her solicitors Miller Harris Lawyers;
(b)the wife’s superannuation funds with (omitted) Super (in the name of Ms Morwood) and the wife’s superannuation funds with the (omitted) Superannuation Fund;
(c)the furniture, chattels and household effects in the possession of the wife; and
(d)the personal belongings in the wife’s possession (including but not limited to her jewellery).
The husband retain and/or receive as his absolute property all his right, title and interest to and in the following:-
(a)the residential real property situate and known as Property S in the State of Queensland, being the whole of the land more particularly described as (omitted) on Registered Plan (omitted), county of (omitted), parish of (omitted), having title reference (omitted), subject to all existing encumbrances in relation to which he shall be solely liable. He is, within 60 days hereof, to obtain the release of the wife from any and all liability with respect to the (omitted) loan secured by the real property;
(b)the real property situate at (omitted) on Registered Plan (omitted) in the State of Queensland, county of (omitted), parish of (omitted), having title reference (omitted);
(c)the sale proceeds received by the husband for his half interest in the property situated at and known as Property G in the State of Queensland which was sold by the husband on or about 15 July 2013;
(d)the husband’s business Mr Morwood (ABN (omitted)) and the farming, workshop plant and equipment valued at $514,525;
(e)the husband’s Mercedes Benz motor vehicle;
(f)the funds held in the husband’s bank accounts;
(g)the furniture, chattels and household effects in the possession of the husband; and
(h)the personal belongings in the husband’s possession (including but not limited to the husband’s Rolex watch).
The wife remain responsible for and indemnify the husband with respect to any and all liabilities in her name and existing as at the date of these Orders, save for the (omitted) mortgage which is to become the liability of the husband pursuant to these Orders;
The husband be responsible for and indemnify the wife with respect to any and all liabilities in his name including:-
(a)the outstanding costs order made against him and in favour of (omitted) Group in District Court proceedings number (omitted);
(b)his (omitted) Visa Card debt; and
(c)all liabilities associated with his business Mr Morwood (ABN (omitted)).
Unless otherwise specified in these Orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders:-
(a)each party is solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party at the date of the making of these Orders;
(b)each party is to retain all other assets, financial resources and liabilities in their respective names, including credit or debit balances in any bank accounts and any credit card liabilities;
(c)each party 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; and
(d)each party hereby forgoes any claim they may have to any superannuation benefits belonging to or earned by the other.
In the event of the husband’s non-compliance with orders numbered (1) and/or (3)(a) herein there is liberty to the wife to apply on short notice for an order for the transfer to her or sale of the real property situate at (omitted) on Registered Plan (omitted) in the State of Queensland, county of (omitted), parish of (omitted), having title reference (omitted) and other consequential orders. The costs of any such application as against the husband can be sought by the wife.
IT IS NOTED that publication of this judgment under the pseudonym Morwood & Morwood is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
CSC 527 of 2012
| MS MORWOOD |
Applicant
And
| MR MORWOOD |
Respondent
REASONS FOR JUDGMENT
These proceedings commenced by the Applicant wife filing an Initiating Application on 29 October 2012. The wife subsequently filed an Amended Initiating Application on 7 August 2013 and a Further Amended Initiating Application on 6 June 2014. The wife relied upon this document, her Affidavit filed 7 May 2014 and her Financial Statement filed 7 May 2014. She also relied upon, as did the husband, various expert witnesses but the difference between those expert valuers was compromised or agreed during the trial with the result that the asset pool set out in paragraph 10 herein was largely agreed between the parties.
The Respondent husband filed an Amended Response on 28 August 2013. The husband relied upon his Affidavit filed on 20 May 2014, the Affidavit of Y filed on 21 May 2014 and the Affidavit of Z filed on 21 May 2014. The husband also relied upon his Financial Statement filed on 23 May 2014. The husband sought at the outset simple orders – that each party keep those assets (including real property and superannuation) and liabilities which they each personally had in their respective possession, or an entitlement to at the time of the hearing, and that there be no further adjustment of property between the parties. This equated to, without looking to the disputed issues of legal costs paid, an adjustment to the wife of approximately 22.6 per cent of the net asset and superannuation pool. In closing the husband conceded, if nothing else, the practical difficulty and lack of severance of their financial relationship in the wife remaining responsible for a mortgage of approximately $90,000 secured over the former matrimonial home which is registered solely in his name and in respect of which loan he was, in any event, a guarantor. Further, he wished to continue his occupation of the property. The husband agreed therefore to be responsible for the payment out of this mortgage and thus a consequent order where liability for it would be transferred to him. Thus he proposed orders wherein the wife would receive $616,622, most of which existed in superannuation monies not immediately available to the wife. This represented 26.67 per cent of the net asset pool (including superannuation), before a consideration of the outstanding legal costs.
The wife sought, in her Further Amended Initiating Application filed 6 June 2014, the following orders:-
“Property M property
1. That, within 45 days of the date of this order, the husband shall do all such acts and things and sign all such documents as may be required to transfer to the wife, at the expense of the husband, all of his right, title and interest in the property situated at and known as (omitted) on Registered Plan (omitted), county of (omitted), parish of (omitted), having title reference (omitted) (“the Property M property”), free from all encumbrances.
Property the wife will retain and/or receive
2. The wife will retain and/or receive as her absolute property all her right, title and interest to and in the following:
a) the funds held in the wife's bank accounts;
b) the wife's superannuation funds with (omitted) Super (in the name of Ms Morwood) and the balance of the wife’s superannuation funds with the (omitted) Superannuation Fund after the superannuation split in paragraphs 4-12 of these orders is carried into effect;
c) the furniture, chattels and household effects in the possession of the wife at the date of the signing of these orders; and
d) the personal belongings in the wife’s possession, at the date of the signing of these orders (including but not limited to her jewellery).
Property the husband will retain and/or receive
3. The husband will retain and/or receive as his absolute property all his right, title and interest to and in the following:
a) the residential real property situate at Property S, in the State of Queensland, being the whole of the land more particularly described as (omitted) on Registered Plan (omitted), county of (omitted), parish of (omitted), having title reference (omitted) (“the Property S property”), subject to all existing encumbrances;
b) the sale proceeds received by the husband for his half interest in the property situated at and known as Property G, in the State of Queensland, which was sold by the husband on or about 15 July 2013;
c) the husband’s business Mr Morwood ABN (omitted);
d) the husband's Mercedes Benz motor vehicle;
e) the funds held in the husband’s bank accounts;
f) the furniture, chattels and household effects in the possession of the husband at the date of the signing of these orders; and
g) the personal belongings in the husband’s possession at the date of the signing of these orders (including but not limited to the husband’s Rolex watch).
Superannuation
4. That in accordance with s90MT(4) of the Family Law Act 1975, a base amount to be determined by the Court is allocated to the husband out of the wife’s interest in the (omitted) Superannuation Fund.
5. That, in accordance with s90MT(1)(a) of the Family Law Act 1975:
(a) The husband (or such other person to whom a splittable payment is payable) is entitled to be paid, using the base amount allocated in the immediately preceding order, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
(b) The entitlement of the wife in the (omitted) Superannuation Fund (or the entitlement of such other person who becomes entitled to receive a payment out of the wife’s superannuation interest) is correspondingly reduced by force of this order.
6. That the trustee of the (omitted) Superannuation Fund (“the trustee”) shall do all such acts and things and sign all such documents as may be necessary to:
(c) calculate, in accordance with the requirements of the Family Law Act 1975 the entitlement awarded to the husband in the immediately preceding clause of this order; and
(d) pay the entitlement whenever the trustee makes a splittable payment from the wife’s interest in the (omitted) Superannuation Fund.
7. That this order has effect from the operative time and the operative time is the fourth business day after the order is served on the trustee.
8. That, after service of the payment split notice in accordance with the Superannuation Industry (Supervision) Regulations 1994 (“the SIS Regulations”), the husband shall do all such things and sign all such documents as may be necessary, including but not limited to exercising the husband’s request in accordance with the SIS Regulations, for the retention of the non-member spouse interest in the husband's name in the (omitted) Superannuation Fund.
9. That until such time as the superannuation split to the husband pursuant to these orders can be rolled over into a separate account to the husband:
(e) the wife provide to the husband no less than twenty-eight (28) days’ notice before such time as she elects to retire from and/or take voluntary retirement and/or for any reason accept or become entitled to access in whole or in part her entitlement in the fund;
(f) the wife direct and authorise the trustee of the fund to communicate with the husband and/or any person authorised by him in writing:
(i) to answer any reasonable inquiries as may be made by him or on his behalf from time to time in relation to her entitlement in the fund; and
(ii) to provide to the husband and/or his authorised representative a copy of any notice of any application or request by the wife which seeks release of her entitlements in the fund in so far as that release may affect the husband’s entitlement in the fund pursuant to these orders.
10. The wife, by herself, her servants and/or agents be and hereby are restrained from doing any act or thing which would prevent the husband, his heirs, executors, administrators or nominees from receiving the benefits in the fund to which he is entitled pursuant to these orders.
11. In the event that the superannuation split to the husband pursuant to these orders can be rolled over into a separate account to the husband each of the parties shall do all such acts and things and execute all such documents as may be necessary to facilitate and to implement that rollover.
12. That the Court notes:
(g) The value of the non-member spouse interest is calculated in accordance with the SIS Regulations; and
(h) any payments from the wife’s superannuation interest in the (omitted) Superannuation Fund made after the trustee has created a new interest in the husband’s name in the (omitted) Superannuation Fund are not splittable payments in accordance with Division 2.2 of the Family Law (Superannuation) Regulations 2001.
Liabilities for which the wife will be responsible
13. The wife will remain responsible for and will indemnify the husband with respect to any and all liabilities in her name and existing as at the date of these orders.
Liabilities for which the husband will be responsible
14. The husband will be responsible for and indemnify the wife with respect to al liabilities in his name, including:
a) the outstanding costs order made against him and in favour of (omitted) Group in District Court proceedings number (omitted);
b) his (omitted) Visa Card debt; and
c) all liabilities associated with his business Mr Morwood ABN (omitted).
General
15. That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders:
a) each party is solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party at the date of the making of these orders;
b) each party is to retain all other assets, financial resources and liabilities in their respective names, including credit or debit balances in any bank accounts and any credit card liabilities;
c) each party 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; and
d) each party hereby forgoes any claim they may have to any superannuation benefits belonging to or earned by the other.
16. In default of the parties, or either of them doing all acts and things and executing all such documents as are necessary to give effect to these orders, a registrar of the Family Court of Australia at Townsville be and is hereby appointed, pursuant to s106A of the Family Law Act 1975 (Cth), to execute all such documents in the name of the party in default and to do all such acts and things necessary to give validity and operation to the said orders.”
The wife had sought in opening an adjustment of property interests, such that she receive 66 per cent of the net asset pool.
What the wife sought in the filing of her Further Amended Initiating Application in closing was an adjustment of the property pool of assets and liabilities and superannuation such that she receive approximately 60 per cent thereof. She also made provision for the Court to make a splitting order in respect of her superannuation. If the Court were to notionally enlarge the asset pool by a further $1.8 million to take into account the monies paid to the husband’s children, Y and Z, and as a result of the operation of s.106B of the Family Law Act 1975 (Cth) (‘the Act’) as urged by Counsel for the wife, then in the alternative, the wife sought a distribution of property as between the parties as to 50 per cent to each of them.
Statements of fact in these Reasons are findings of fact on the balance of probabilities.
History
The husband was born on (omitted) 1941 and is now aged 72 years. He continues to perform (omitted) contracting work and some farm contract work, but due to health difficulties which are elaborated on hereafter, he is unable to work to the same extent that he has over many years. There is also the obvious element of his age. His income before depreciation for the year ended 30 June 2013 was $43,878.98. He is currently able to earn income of approximately $32,000 per annum before being liable for a taxation amount. The wife was born on (omitted) 1950 and she is now aged 64 years. She is qualified and employed as a (omitted) in receipt of income of approximately $81,547 gross per annum. This includes an amount of $10,542 in fringe benefits. Her health is good.
The parties commenced cohabitation in (omitted) 1991. They married on (omitted) 1992 and separated on 1 September 2012. They are now divorced, the Divorce Order becoming final on 5 November 2013. The parties’ cohabitation period was approximately 21 years. Upon separation the wife left the former matrimonial home which the husband has continued to occupy. She took up rental accommodation in (omitted) in (omitted). She subsequently used the former matrimonial home as security for a loan and has met repayments with respect thereto. The parties have a son, X, who is now an independent adult. He was aged six years at commencement of cohabitation. He is the child of the wife and her former husband, Mr C. Mr C died on (omitted) 1993. At the time of his death, the wife and the husband in these proceedings were married. In 1998, the husband legally adopted X. X was approximately 13 years old. X had been known as X since 1994, being a period of approximately 12 months after the death of his biological father. Whilst X resided in the household of the parties he was cared for and financially supported by both.
The husband, at commencement of cohabitation, had two children from a previous marriage. They are now independent adults. They are Y and Z. They were witnesses in the proceedings. At commencement of cohabitation, Y was aged 19 years and Z 16 and a half years. Z was completing year 12 and Y had left school and was in receipt of income.
Asset Pool
The asset pool of the parties and ownership at trial is comprised as follows:-
a)
Asset Ownership Value The former matrimonial home situate at Property S (valued May 2014) (hereafter referred to as the ‘former matrimonial home’) Husband (the husband also has occupation) $300,000 Property M (valued May 2014)
(hereafter referred to as ‘Property M’ in these Reasons)Husband $1,000,000
(the expert valuers, Mr D and Mr E agree that in the period of between 3 to 10 years this value may increase significantly. This cannot be assessed with any reliability and I refer to paragraph 13 hereafter for further explanation.)Mercedes (omitted) (valued May 2014) Husband $40,000 Farming, workshop plant and equipment Husband $514,525 Sale proceeds received by the husband from his half interest in (omitted) farm land at Property G Husband $50,000 Business – Mr Morwood ABN (omitted) (sole trader business) Husband $0
(As agreed between expert witnesses, Mr G and Mr D.)Mr Morwood work in progress Husband $6,600 Husband’s farm account Husband $0 (omitted) Bank savings account Wife $9,958 (omitted) Bank account Wife $51 Net funds in Miller Harris Lawyers trust account for legal fees of these proceedings (from the (omitted) home loan taken out by the wife and secured over the former matrimonial home) Wife $18,263 Monies paid by the husband pursuant to an earlier costs order against him and in favour of the wife. Such funds were obtained in March 2014 from the farm account and in a calculation of assets and liabilities are taken into account as an asset in relation to which the husband has had the benefit. Husband $74,259 Total assets $2,013,656
b)
Superannuation
Ownership
Value
Wife's (omitted) superannuation
Wife
$57,813
Wife's (omitted) Super Scheme
Wife
$514,707
Husband’s superannuation
Husband
$0
Total superannuation
$572,520
Total assets and superannuation
$2,586,176
c)
Liabilities Ownership Quantum (omitted) Mortgage on the former matrimonial home Wife
(these mortgage funds were obtained by the wife for part payment of her legal costs. The husband is a guarantor of the loan. This amount represents a deduction in the asset pool and funds which have in part been received by the wife. However, on the asset side of the ledger is an amount of $18,263 which remains in the wife’s solicitors trust account as unexpended monies. So the wife has had the benefit of $90,170 less $18,263 which is $71,907. She has the ownership of the $18,263 in this table. The husband has had the benefit of $74,259 in the form of the payment of the costs order against him.)$90,170 Private loan of funds from Mr L Wife $4,000 Overdraft on farm account as at 5 June 2014 Husband $49,278.21 Credit card as at 5 June 2014 Husband $50,326.86 Tractor loan – (omitted) Bank Husband $51,826.88 Creditors (various) Husband $21,385.78 Taxation Husband $6,884 Total liabilities $273,871.73 Total assets including superannuation, less liabilities $2,312,304.27 approximate up to $2,312,305, the figure agreed at trial d)
Disputed amounts
Ownership
Amount
Wife’s legal costs
Wife
$256,094 (of which the husband has paid $74,259.)
Husband’s legal costs
Husband
$140,000
Further agreed matters as to the asset pool:-
e)The husband and wife each have furniture of approximately equal value which they have agreed will not be included in the calculation above.
f)The wife has jewellery and the husband a watch of approximately equal value which they have agreed will not be included in the calculation above.
By joint letter to the Court dated 6 June 2014, the parties advised that:-
“Subject to the Applicant Wife filing an Affidavit confirming that she paid $143,251 from her superannuation funds towards her legal costs and the sum of $14,627.50 from her income towards her legal costs, then the parties accept those amounts were paid towards her legal costs from August 2012 until June 2014.”
The wife filed such Affidavit on 12 June 2014.
In respect of Property M, the following relevant evidence is before the Court. The valuers agreed on the current valuation of the remaining Property M of farm property at $1,000,000. Mr E, a Certified Practising Valuer at (omitted) Pty Ltd nevertheless proposed, to which Mr D, a Certified Practising Valuer at (omitted) Pty Ltd agreed, that the value of the property could increase significantly in a time frame which, they then compromised, of three to ten years. The timing of any increase in value is dependent upon the finalisation of the draft (omitted) and full approval being granted for the (omitted) project. Within the town planning scheme Property M is designated as “rural 2”. Its development potential may occur or not occur within the life times of the parties. The party who possesses the land will have that development prospect. Neither party sought that they have any form of joint ownership of this property in the years to come. Given their distant relationship and the need for these proceedings, any such outcome is not practicable. The leaving of the legal title, with its potential benefit, in the husband’s name is a matter I take into account pursuant to s.75(2)(o) of the Act along with the other matters detailed hereafter which support an adjustment to the wife of overall 10 per cent.
Outset
At the outset of these Reasons I set out a matter which did not become evident until the conclusion of the proceedings. It was nevertheless an important matter, going to the heart of the husband’s contribution at the commencement of the relationship and the husband and wife’s contributions during cohabitation and their subsequent marriage. The husband registered his ownership of the farming property of Property M (100 acres) and 11 (67 acres) situate at Property M (‘the farm property’) on (omitted) 1990. He paid $129,659 to buy out his brothers’ interests. He recalled doing so in 1989. The balance of the farm property he had earlier inherited. The value of that part he inherited was not placed in evidence before the Court by the husband. In (omitted) 1991, the husband and wife commenced their cohabitation. A mortgage was already secured by the (omitted) Bank over the husband’s interest in the former matrimonial home. That mortgage remained registered until December 2007. Property M of the farm property was shortly after cohabitation commenced, used as security for a loan and thereafter the farm property was used for further borrowings in the period from October 1991 to April or September 2002. Initially there was secured against the farm property a loan of $150,000. The application of these and subsequent borrowings was not specified by the husband in the proceedings, save a claim for farm expenses. Nor did the husband put before the Court the terms under which he purchased his brothers’ inheritances or acquired interests in the farm property. His evidence was that at the time of commencement of cohabitation he was struggling financially in terms of income, and had an overdraft relating to the operations of his farming business. On 8 October 1991, the initial monies were borrowed. Thereafter the debt increased as follows:-
a)on 23 November 1992 to $220,000;
b)on 21 January 2000 to $236,500;
c)on 28 March 2000 to $260,000;
d)on 28 November 2000 to $300,000; and
e)in April or September 2003 to $320,000.
This debt, existing from the early years of the marriage, was not disclosed by the husband until the trial. At trial the only monies owing to the (omitted) Bank by the parties were the tractor loan, the farm overdraft and some credit card debt. No debt was secured over the remaining Property M of the farm property, nor (until the wife taking out a loan for her legal costs) had there been for some years with regard to the former matrimonial home.
Contribution at commencement
At the commencement of cohabitation, the wife had negligible assets. She had a young child who commenced to be supported by the husband. She claimed to have received a sum of $10,000 in 1992 from her former husband by way of partial property settlement. Her evidence is that she gave the sum of $5,000 to the husband for him to repay a (omitted) Bank debt, as “money was tight” and their “income was poor”, and that she applied the balance of the funds (in the sum of $5,000) to the purchase and laying of carpets in the former matrimonial home. The husband denied the wife received such funds but stated further that if she did, she did not apply them in the manner described by her. There was no corroborative evidence before the Court of the wife’s claim, save the husband’s own evidence that they were income poor. I prefer the evidence of the wife to that of the husband as to this matter and specifically that as contained in paragraph 9 of her trial Affidavit. The financial evidence of loan acquisition by the husband at this time, and that of the wife, including the wife taking out a loan of at least $10,000 in her name in 1998 to fund improvements to the former matrimonial home, also generally supports the evidence of the wife. Further, the wife was clear and careful in her recollection of this matter whilst the husband’s recollection was not as reliable.
At the commencement of cohabitation, the husband had significantly more assets than the wife. Relevantly, he had:-
a)the former matrimonial home. It was encumbered by a mortgage of small value as claimed by the husband. Its value then is unknown;
b)a farm at Property M (being (omitted) on (omitted) and (omitted) on (omitted)) which he had acquired by inheritance in part and by purchasing the remaining interest owned by other family members. The husband had become the sole registered proprietor of the entirety of this property for a purchase price as to the remaining part not inherited by him of $129,659 in (omitted) 1990. The source of those funds was not put in evidence by him and the only conclusion available on the evidence as to where the funds derived, is by the registering of a mortgage over the farm property in the following year, or over the former matrimonial home in the preceding year;
c)a motor vehicle which was sold in 1994 for $12,000;
d)an all-terrain vehicle and farm machinery; and
e)other assets of nominal value.
The husband swore in paragraph 36 of his Affidavit sworn 19 May 2014 (his trial affidavit) that in respect of the former matrimonial home there was a mortgage registered at cohabitation but “there would not have been much owing”. This was a mortgage debt to the (omitted) Bank registered on (omitted) 1989. This debt may have in fact related to his purchase of his brothers’ interests in the farm property which he recalled occurred in 1989, but which was not registered until (omitted) 1990. In that case it may have been significant. The husband provided no probative evidence as to this. The Court can make no positive finding, save that as referred to in paragraph 16(b) above. He said in respect of other debt, that the only debt he had was “the overdraft on the farm. I don’t recall how much was owing back in 1991”.
The husband also had two children, one of whom was working and earning income and the other who had a few months remaining at school. Both children worked from a young age on their father’s farm. They were required to work unpaid long hours and had little leisure time.
The wife’s evidence was that the husband’s debt to the (omitted) Bank at commencement of cohabitation was at least $100,000. She annexed to her Affidavit sworn 7 May 2014 (her trial affidavit) at ‘M4’ copies of (omitted) Bank statements for accounts number (omitted) and number (omitted) showing a term loan to the husband for $100,000 on (omitted) 1991 and an instalment loan to the husband for $170,000 on (omitted) 1992. The husband’s response was that such documents would be accurate and that he recalled buying a tractor around that time. The husband had not earlier disclosed these loans or those set out in paragraph 14 of these Reasons. Whether and how such loans overlapped was also not put before the Court.
Contributions during
The wife studied full-time from 1993 to 1995 and thereafter, and whilst employed, in 2006 and 2007. She paid university fees through the HECS deduction of a percentage of her income in respect of her first period of study, and up front and out of her income in respect of her second degree. Whilst studying, the wife was engaged in home duties and the care of X and, to a lesser extent, Z for a brief time. She also did all of the book keeping and office duties of the farming endeavour for the husband, which work she continued to perform for many years thereafter, and which included obtaining a $100,000 government grant in 2005. This grant was then available to farmers wishing to diversify out of (omitted). The wife commenced part-time work in January 1996 and full-time work in 1998. In July 2001, she commenced to work for (employer omitted) on a full-time basis. She retired in December 2007 and was paid out $7,553.42 on leaving that employment. She was then engaged in working in the business of (employer omitted) as described in paragraph 33 hereafter before resuming paid employment with (employer omitted) in March 2009. In August 2009, the wife commenced her current employment as a (omitted) with (employer omitted). Throughout, the wife applied all of her income to the living expenses of the family which included improvements to the former matrimonial home, and payment of matters at times relating to the farming enterprise. In particular, she contributed indirectly in the husband’s repayment of various loans. The wife’s income was used also by the husband in his application for loans with respect to the operations of the farm property and his business. I reject the husband’s claim that the wife was secretive about her income, both as to quantum and application. The wife earnt a variable income, modest at commencement, but which increased over time. The husband’s earnings history throughout the 1990’s and early 2000’s is not before the Court. I accept however that his earnings too were applied to the family’s living expenses, improvements to the former matrimonial home, repayment of debt and the purchase of farming equipment and furniture for the home.
Between 1991 and 2003, the husband worked (omitted) farming on Property M of the farm property and, until 1995, on a leased property adjoining the farm property. He worked very hard with some small input from the wife who was, however, mostly in full-time employment herself. She was able to, and did I find, assist the husband from time to time on weekends and after hours. He would get up at 5.00am or 5.30am six days a week, prepare his breakfast and mostly lunch, leave some prepared breakfast for the wife and commence his day’s work. He arrived home about 12 hours later to a dinner cooked by the wife. In 2005, the husband ceased farming the farm property and increased his (omitted) and farm contract work for other farms. His health problems as detailed hereafter contributed to this transfer in work type. As the wife contributed to the welfare of Y, Z and the husband, so too did the husband to the welfare of X and the wife. The husband paid for X’s private school education and medical, dental and other living expenses assisted by the wife as and when she was able.
X left the former matrimonial home in (omitted) 2003. He was just 17 years old. He had difficulties with the husband and left to reside independently. He commenced year 12 of his schooling but did not complete it. When he subsequently turned 18 years of age, X inherited a share of his father’s life insurance in the sum of $75,000. He spent $60,000 on the purchase of an (motor vehicle). The husband tried to dissuade X from the purchase and suggested to him to invest the monies in the purchase of real property. X prevailed and the money was applied as he chose. The wife then paid $1,400 being monies from the farm account, to fix the car’s glove box, unbeknown to the husband. The wife’s evidence was that X assisted on the farm by driving farm equipment and doing general farm hand duties. The wife claimed this to be at least once per week on the weekends when the parties were (omitted), and sometimes after school and during school holidays. Although the husband, Y and Z gave X no credit for assisting on the farm property and all were entirely dismissive of the wife’s claim, I accept the wife’s claim that X did assist from time to time and as required by the husband. It seemed to be merely a matter of perception amongst the witnesses, although I note that Y was absent from the farm for some years and that Z had his own work commitments so neither could comment as to those times. Certainly the husband’s expectations of Y and Z assisting in the work of the farm when they were younger was, on the evidence, in an entirely different league.
Y resided with the parties until 1993 and Z until 1994. The wife ran the household and carried out modest improvements to the home, and then worked herself, whilst the husband worked long hours. The wife cared lovingly and well for the husband’s children in that period of time and thereafter, treating them as her own.
The husband’s health; the wife’s health
In 1992, the husband had a cardiac arrest. He underwent a triple bypass operation. After the surgery, he contracted staphylococcus aureus. His recovery was slow and painful. The wife assisted him in that recovery by caring for him. In 2007, the husband had a further cardiac arrest. The wife performed cardiopulmonary resuscitation on him until the ambulance arrived. He was lucky to survive. The husband was placed in an induced coma and woke up four days later. The wife, Y and Z kept between them, a bedside vigil. The husband was much loved and cared for. Subsequently, he had a defibrillator fitted. In October 2010, he had three stents inserted. On 5 December 2011, the husband underwent further heart surgery being the replacing of his three bypasses and removal of calcification that went to his earlier triple bypass operation. On 30 December 2011, the husband went into cardiac shock and as at late January 2012, the husband was still very weak. Throughout the occurrence and reoccurrence of these very serious health issues for the husband, the wife remained supportive and concerned. She contributed to his health care and recovery and, I accept, in far greater measure than the husband now gives her credit for.
The wife had some health difficulties during the marriage about which she claims the husband was not very supportive. Essentially, he kept on working. The wife was on one occasion assisted by Y and otherwise got through her illness or injury. Each made complaint about the other’s lack of care at these times of illnesses, but nothing is achieved by that. That is a personal matter, about one’s hopes and expectations. Time and the separation has also perhaps exaggerated small failings and heightened disappointments, or exaggerated or minimised levels of care provided and/or needed. Nothing turns on this, save the husband has genuine health difficulty which impacts adversely upon his capacity to earn income. As does his age.
Y and Z
Z was born on (omitted) 1974. He is now aged 39 years. Y was born on (omitted) 1972. She is now aged 42 years. Their relevant history is as follows:-
a)Y and Z remained living with their father in (omitted) following their parents’ separation in 1979. At the time, Y was seven years old and Z four and a half years old. They saw little of their mother, at her election, until 2001 when she moved back to (omitted). Thus the children were supported and cared for by their father, who had the assistance of aunties and uncles of the children and who paid housekeepers when he was unable, by virtue of work commitments, to personally care for the children. This care arrangement continued prior to the wife moving into the home in 1991, being some 11 years after the children’s mother’s departure. Once their mother returned to the (omitted) area, the children re-established more firmly their relationship with her, supported by the wife. The wife was encouraging of all the relationships with extended family on the husband’s side, and made significant effort at celebratory times to bring the family together. She also provided support and care to Y and Z from 1991, to the extent they needed it. Y and Z ceased to communicate with the wife and X in 2013, following the institution of these proceedings. This has been a big loss to the wife. She has lost the companionship of Y and Z whom she treated as her own children and with it, her relationship with their children. As recently as July 2012, the wife had contributed $5,000 out of her income (as did the husband) to Y to assist in the costs associated with her wedding. This was at a time after the receipt by Y of the sum of $900,000;
b)from a very young age, being five or six years, the husband worked in some way on his family’s farm at Property M. There was little recreational time available to him. He attended school to year 10 and then commenced to work full-time on the farm. His was a hard working life. He raised Y and Z from 1979, assisted as described in subparagraph (a) above and, in particular, from (omitted) 1981, by Ms M. The husband and Ms M had a relationship for many years which ceased in the late 1980’s. They have recently resumed a relationship. The husband and children lived in the former matrimonial home for a period up to 1979 and from 1981 onwards;
c)in the years prior to the wife arriving in their home, Z and Y assisted their father on the farm property. Their father often worked seven days a week. He worked the farm property and also ran an (omitted) business. He commenced work between 5.30am and 6.30am. Z worked with his father for one to two hours a week; on weekends for up to 10 hours each day; and in school holidays for 40 to 50 hours a week from when he was very little, “gradually gaining skills until he could do the work of a man by the time of his early teens”.[1] The husband says of this now “I robbed my son of his childhood by making him work on the farm with me against his wishes”. Y also worked on the farm from a very early age. She became a good tractor operator, attending many out of control fires. She “learnt to drive when she was seven years old”.[2] Y’s evidence, which the Court accepts, is that both she and Z missed out on a social life in their primary and secondary school years. Y “was on the farm driving tractors, mixing chemicals and generally doing whatever was required of me”.[3] Y was required to also develop skills around the house to enable her to perform major household tasks. Even when she commenced to work, Y still worked on the farm property. She did however cease to perform such work between 1993 and 1998, and in 1998 returned to the farm property to assist her father to an increasingly lesser degree. By 2003, she was agisting her own cattle on the farm property and running her own business;
d)Z finished school a few months after the husband and wife commenced their cohabitation and he then became employed as an apprentice, obtaining a trade qualification in 1996 as a (omitted). Throughout, save for a period of approximately 12 months, he continued to work after hours and on weekends on the farm property. He was rarely paid even though his trade qualification enabled him to help the husband in his (omitted) business. In the later years, Z was paid for the work he performed;
e)the work performed by Y and Z obviously saved the parties the payment of wages to other employees to some extent, although that cannot be quantified on the evidence.
[1] Affidavit of the husband filed 20 May 2014 at 46.
[2] Affidavit of the husband filed 20 May 2014 at 49.
[3] Affidavit of the husband filed 20 May 2014 at 7.
Y commenced agisting cattle on 30 acres of Property M of the farm property in 2003 and a further 30 acres on Property M in 2005. From 2009, Z has used that part of Property M not used by Y, for (omitted) farming. Both Y and Z retain the profits from their respective enterprises. The husband has paid some of the farm property outgoings. Part of the wife’s case was to seek a lump sum for what she claimed to be agistment and licence fees not received from Y and Z. This was despite no agreement being entered into to that effect, nor any commercial arrangement being sought by her at any time to be entered into between the husband and the children, Y and Z. The wife may have disapproved at some unknown point in time of the arrangement, but it existed as a family agreement for many years, including some three years prior to the separation. Y outlayed approximately $40,000 in the establishment of her cattle agisting business. She worked for 200 hours over eight weeks; paid for all the necessary fencing material; and performed all necessary tractor work preparing the ground for the agistment of the cattle. When the sale of Property M was proposed by her father, she objected to the sale, but conceded ultimately it was her father’s decision as it was ‘his land’. During the running of the proceedings, the wife sensibly abandoned this claim for agistment fees.
Sale of Property M
The city of (omitted) was expanding and, relevantly in 2006 and 2007, developers purchased surrounding farm lands for many millions of dollars more than those lands previous values. The husband had commenced discussions with Y and Z in 2006 about the potential sale of the farm property to developers. The husband’s evidence is that throughout his discussions with Y and Z, and subsequently developers and the wife, Property M was never to be offered for sale by him. The husband determined to sell Property M of the farm property. He did so and to developers ((omitted) Group) in December 2007. The sale price was $4,700,000. The parties and their children were very happy with the “windfall” sale price received which resulted from the establishment and progression of the (omitted) plan.
The net sale proceeds from the sale of Property M were approximately $4,500,000. These funds were placed in an account in the husband’s sole name. In May 2008, the husband gave Y and Z $1,000,000 each from the proceeds of sale. The children subsequently returned $200,000 to their father to pay a capital gains tax liability. Otherwise the funds were applied to:-
a)pay out three (omitted) Bank loans for $200,000, $127,980.33 and $98,994.41 (a total of $426,974.74) secured over the former matrimonial home and by a commercial mortgage;
b)further capital gains tax of approximately $200,000;
c)a gift to X of $150,000 and subsequently approximately $350,000 to (employer omitted) being monies now lost to the parties;
d)$450,000 in a superannuation account in the name of the wife;
e)$500,000 approximately in a superannuation account in the name of the husband;[4]
f)the purchase of the farm property in Property O; and
g)other sundry living and farm expenses.
[4] Affidavit of the husband filed 20 May 2014 at 148.
The wife’s evidence as to the husband’s gifting $900,000 to each of Y and Z was that she was shocked. She claimed to have said to the husband:-
“How about giving the children $500,000 each? Why are you giving them so much?”
The husband denies this conversation ever took place. He claims that the wife always knew and acknowledged that the farm property was the “birth right” of Y and Z and that she did not, at any time before separation, seek to make a claim with respect thereto or make any comment as to his disposal of the sale proceeds of Property M of the farm property. That is not plausible evidence nor is it supported by the totality of the evidence in the proceedings. I accept the wife indicated to the husband that it was appropriate to gift each of the three children money from the sale of Property M, and that she consented to such gifts. Further, that she herself acknowledged a greater sum should be given to Y and Z, although not as much as the husband in fact gifted. Nevertheless, that was in 2008. In the next four years she did not quarrel with those gifts nor did she seek any reimbursement of part thereof or accounting in respect of the application of funds by Y and Z. She sought further funds from the husband to be applied to the benefit of X (as described in paragraphs 33 to 35 hereof) and such further sums were paid by the husband, together with thereafter the administration costs and the wife’s bankruptcy costs, including repayment of her creditors. This was a further sum in total of approximately $386,000. The wife at no time discussed with the husband the parlous state of X’s business nor the fact that she had applied $65,000 of her superannuation monies acquired during the marriage, also to the business.
The wife discussed with the husband the taking of holidays and the building of a home for them on the remaining farm property at Property M. The wife had plans drawn for the building of such house, at a cost of several thousand dollars. A builder looked at the plans. The husband in evidence described it as the wife’s “dream” which he knew would never go ahead due to local council restrictions in respect of further building on the land. Nevertheless, he had acquiesced in the expenditure of monies for plans to be drawn, evincing an intent to proceed to build a family home for he and the wife on Property M, contrary to his assertion that the land was the “birth right” of Z and Y. Nothing was progressed and there remains a transportable building on Property M. Y lived in this building from 2007 until 2010. She continues to use it weekly and is joined there by her father and Z.
Of the $450,000 placed in a superannuation fund in the wife’s name with (omitted) and in 2008, several “regular pension payments” totalling $15,592.92 were paid out to the husband at his direction. In addition, other payments were made from the fund to the husband being $40,000 in January 2010; $58,000 in August 2010; and $40,000 in January 2012. Such monies reduced or paid out from time to time the (omitted) Bank overdraft on the farm account. $153,595.92 was applied in this manner. The wife was restricted in her capacity to withdraw monies from the fund because she was not aged 65 years. The husband considered such monies his in any event. His evidence as to the superannuation fund monies of the wife was that the deposit and any interest earnt were “my [his] funds”. He also withdrew such funds in a partial repayment to him of the monies he had advanced to X’s business. The husband’s own superannuation monies were withdrawn by him to meet farm expenses and to “pay my own legal fees”.[5] I can make, on the evidence before me, and with the requisite standard of proof, no findings as to what precisely the husband has done with such a large sum of money at his disposal. The quantum of his legal costs left considerable funds available to the husband to pay the “expenses of the farm”, in particular, given he was no longer farming Property M, Y and Z were, and he had sold the farm purchased (in 2010) with Z in 2013. His evidence, unchallenged, is that he has now amassed a further $178,000 approximately of liabilities in respect of his business.
[5] Affidavit of the husband filed 20 May 2014 at 148.
(employer omitted)
(employer omitted) ACN (omitted) (‘the company’) was established by the wife and X to run a (omitted) business known as ‘(employer omitted)’. The wife and X were registered as the company’s directors (the wife resigned from this position in June 2009) and X was the sole shareholder. X entered into a lease agreement to rent business premises in (omitted) in early 2008 and contractors were engaged to fit out the building. The set up costs for the business and initial working capital were paid by the husband in his provision to X of a gift of $150,000, being a part of the sale proceeds of part of the farm property Property M). In addition, the wife contributed $65,000 approximately from her (omitted) superannuation fund. The wife did not advise the husband of her withdrawal of, or application of, these funds. The business commenced to operate in May 2008. The business, which was essentially operated by X, did not perform well. As at 30 June 2009, the company was trading at a loss of $214,979.40. X drew funds from the business to pay for his living expenses. The wife received no drawings or salary for the work performed by her during April 2008 and March 2009 on a full-time basis, and between March 2009 and June 2009 on an after-hours basis. Further, the wife took out a personal loan with the (omitted) Bank in 2009 for $20,000 to pay expenses associated with the business; she borrowed $12,500 from a friend (Mr J); and she utilised credit cards to enable her to meet the company’s expenses and debts. From 6 April 2010 to 31 May 2010, the company was placed under administration and from 31 May 2010 until 1 November 2010, the company was placed under a deed of arrangement. On 12 November 2010, the company exited this deed of arrangement. The husband paid $32,000 for the company administrator’s costs (the business had ceased trading in April 2010). The wife lodged a Debtor’s Petition in April 2012 and voluntarily entered into bankruptcy. Prior to the annulment of her bankruptcy, the wife made payments out of her income of $4,223.78 to her trustees in bankruptcy. The wife’s bankruptcy was annulled on 5 November 2013 by a payment from the husband of $150,000 to the bankruptcy trustees.
The husband provided to the wife $50,000 on 30 June 2008; $50,000 in August 2008; $100,000 in December 2008; $30,000 in February 2009; $60,000 in March 2009; and a final payment of $29,833.45 in December 2009, being monies requested by the wife from the husband, and applied to the business (approximately $320,000). When the company was wound up, the husband lodged a formal proof of debt dated 14 April 2010 claiming $350,000 as loans to the company. The husband said in evidence in these proceedings that he had not forgiven this amount and considers the loans were made to X personally.
Since these proceedings commenced, the husband has been required to pay the sum of $181,000 to the wife’s creditors in the bankruptcy, and otherwise relating to the debts of the company, from the sale of property at Property G, being vacant farming land purchased jointly by the husband and Z during the course of the marriage and from the sale proceeds of (omitted). The husband received an amount of $274,283 in net proceeds in July 2013, only some of which now remains in the asset pool available for division between the parties. The husband and wife have now each received $11,379.86 back from the monies paid by the husband in respect of the wife’s bankruptcy pursuant to an earlier order of this Court. Further, the husband was required to pay $36,000 to retire the debt that was on X’s credit card in January 2014. The husband was a guarantor. X has since returned to him approximately $15,000.
Discussions concerning distribution of Property M proceeds of sale
The husband’s evidence was that upon the wife commencing to reside with him, he made clear to her that neither she nor X would inherit the farm property he inherited from his parents. He claims to have said to her, words to the effect of “the farms are the birth right of Y and Z and they must go to them”. He claims the wife responded to the effect of “yes I understand” and that she “agreed”. The husband remained throughout the proceedings adamant that the wife knew, and accepted, that the farm property was the “birth right” of Y and Z. Further, the husband claims he had repeatedly told his children this. In 2008, he told his solicitor whom he had engaged to prepare his Will, that the wife had been told by him that she would not get Property M, the then remaining land.
The wife’s evidence was that she did not recall the husband ever stating to her that the farm property was to be given to Y and Z to the exclusion of she and X. To the contrary, she recalled the husband telling her of his Will in 1992 which made provision for her.
Y and Z’s evidence was that they had always been told by their father that the farm (in its entirety) would be theirs. This Y said, was on occasion said by their father in front of the wife. The wife denies this. The Court finds it was not said in front of the wife. Indeed, both before and after the sale of Property M until 2008, nothing was said in front of the wife as to her having no entitlement to the proceeds of sale of Property M and to the remaining Property M, as was evidenced by the exclusion of the wife at meetings with accountants and solicitors as to the husband’s application of the net sale proceeds of Property M, and the terms of the husband’s wills. Z gave evidence that following separation and in 2013 the wife said to him “don’t worry I will not touch any of your father’s farm. I know it is for you both to inherit”. Y and Z’s evidence was that the remaining farm comprising Property M belonged to them. It was their “birth right” which their father would leave or give to them, as he had always expressed to them. In the proceedings, they gave evidence as witnesses in support of their father’s application. They did not seek to, nor did they intervene in the proceedings, to make an independent claim. They were clearly on notice as to the wife’s claim in respect of Property M. That claim is squarely that they have no entitlement.
In order to protect the beneficial entitlement, as he claimed it, of Y and Z, the husband attended various meetings to discuss the disposal of the sale proceeds of Property M. The meetings between the husband, Y and Z; the husband, Y and her accountant; and the husband’s solicitors, the husband and Y, which occurred in 2007 and 2008, were held to discuss primarily what to do with the “windfall” proceeds of the sale of Property M of the farm property. Such discussions were aimed at excluding the wife from any entitlement on the basis that the wife agreed, accepted and acknowledged that she had no beneficial entitlement of any description. The wife was not however invited to any of the meetings, nor specifically were her instructions sought from any lawyer or accountant as to the matter. The first discussion which occurred as to the distribution of the proceeds of sale of Property M wherein the husband, wife, Y and Z were present was in 2008. The wife, I find, did not state or agree at any time that she had no entitlement to a share of the farm property.
Following the parties marriage and in 1992, the husband did a Will. In that he provided for the wife to receive the former matrimonial home and part of the farm property being, he now says, a quarter share of Property M. The husband did not produce that Will. Its lack of disclosure does not assist the husband. A quarter share would be the minimum provision he made for the wife at the time I find. In 1998, the husband did a further Will. In that he provided that the wife receive the former matrimonial home and a quarter share of Property M and half the farm machinery. In his Will of (omitted) 2005, the husband left the former matrimonial home to the wife and the entirety of Property M to Y and Z for the first time. In 2011, the husband had drawn up a further Will, which he repeated in similar terms in 2013. It provided for the wife to have the husband’s personal and household chattels and a life interest only in the former matrimonial home. If the wife ceased to occupy the home, it was to become the property of Y and Z. The remaining assets of the husband went to Y and Z. By that time, Y and Z had already received a distribution of $900,000 as described herein. It is clear the husband intended for the wife to share in the farm property until 2005. It was not the “birth right” of Y and Z. Thereafter he gradually moved to a position of leaving the wife, pursuant to the terms of his Will which he hoped would prevail, with nothing.
Section 75(2) of the Act matters
I do not think s.106B of the Act is engaged in the facts and circumstances of this case but if it were, the Court would not exercise its discretion to grant relief pursuant to that section.
The Court proposes to deal with the monies paid out to Y and Z as a matter to be taken into account pursuant to s.75(2)(o) of the Act. Y and Z were not joined as parties to the proceedings. What precisely they have done with the monies gifted to them by their father some six years ago is not known to the Court. The wife does not seek to have the monies returned to the parties or either of them. The effect of the gift to Y and Z was to remove those monies from the pool of assets available for division between the parties. But likewise the gift and other monies advanced by the husband and wife to X and the business he and the wife (for a time) operated has also had the effect of removing those monies from the pool of assets available for division now. Whilst the wife was unaware of the discussions held by the husband with his solicitor as to how to preserve monies for Y and Z to the exclusion of the wife, and thus her Counsel argued any consent of hers to a payment made to Y and Z was uninformed consent, I find that what did happen was that a gift was made with the knowledge of the wife; anticipated by the wife; but not as to quantum; and not thereafter sought to be disturbed by the wife, including at the present time. It was made after many years of marriage and now, a number of years ago. The wife felt at liberty to seek to obtain significant additional funds for X which were provided to her. Whatever the husband thought he might do, he did provide for the wife and X in the manner described herein. There remains available now sufficient assets to satisfy any claim of the wife.
The wife and the husband, and both directly and indirectly, applied the income received by each of them to the repayment of debts, whether in sole names or not, over a very long period of time. Those debts were considerable in the early years of the marriage and secured over the former matrimonial home and the farm property. The wife has suffered detriment in so doing. The debts were repaid. This was done without obligation or payment by Y and Z. The husband’s claim that Y and Z had a beneficial interest in the farm property is not consistent with the legal title, and is not supported by the evidence.
The husband, at the time of his purchasing of his brothers’ interest in the farm property, became the sole registered proprietor of same. He held the real property on behalf of no-one else, save eventually the wife. He paid the outgoings on the farm property until such time as he commenced to be assisted indirectly by the wife. At no time did he convey any part of the farm property to Y or Z.
Justice and equity
The Court will not notionally add-back any amount to the property pool as calculated in paragraph 10 of these Reasons. The application and continued existence of monies received by the children in 2008 and 2009, save as to X’s business, is not known by the Court, nor the dollar equivalent today. Importantly, such concept of exceptional add-back is not an appropriate exercise of this Court’s discretion in the facts here. As was said by Young J in Sebastian v Sebastian at paragraph 799:-
“… The identification of the parties’ “existing” property stands contrary to the idea of notionally adding-back property which has already been expended or dissipated.”[6]
[6] (No 5) [2013] FamCA 191.
The husband’s payment of such a large sum proportionally to the asset pool available for division between the parties to each of Y and Z does have the effect of eradicating any contribution adjustment in the husband’s favour, together with requiring a s.75(2)(o) of the Act adjustment. Because of the heavily encumbered nature of the husband’s assets at commencement of cohabitation and thereafter, his contribution argument is significantly diminished in any event.
Each of the husband and wife seek ownership (the husband to continue his sole proprietorship) of the remaining Property M. This land forms part of the husband’s family inheritance. It is land he has worked for over six decades. It is land Y and Z have been extensively involved with through their father’s family ties and through their own labours. The husband brought it into the marriage. It exists as legal title in the husband’s name. Should that be disturbed without giving the husband an opportunity to buy out the wife’s interest by application of the Act? There is the question of its value in the future, and how far into the future. Justice and equity will be served by allowing the husband to retain his existing title upon a payment in relatively short time frame to the wife. Should the husband not make such payment, then leave will be granted to the wife to seek from the Court orders to affect a transfer of the husband’s interest to the wife or a sale. That order is not made here because the parties require an opportunity to consider the time frame within which the wife might sell Property M to obtain her entitlement pursuant to the orders, including whether she be given the option of retaining the land and paying the husband out at some later date. There is also a consideration of the taxation implications. Retention of Property M by the husband will result in no capital gains tax being payable given the capital losses of $462,129 he can carry forward, together with the small business capital gains tax concessions available to him. This is as set out in the Affidavit of Mr G sworn 23 May 2014. This provides another benefit to the husband. The taxation position with regards to the wife’s holding of Property M was not before the Court.
The total asset pool is $2,312,305 as set out in paragraph 10 of these Reasons. The wife currently has, including her superannuation entitlements which she can access in April next year, the sum of $600,792, less $94,170, equalling $506,622 available to her. This requires the wife to pay out the mortgage secured over the former matrimonial home notionally.
The husband’s distribution to Y and Z and the quantum of such distribution, together with the other matters as set out in these Reasons, requires an adjustment in favour of the wife of 10 per cent of the net assets. Each of the parties’ contributions during the marriage was equal. The husband’s contribution at commencement is discussed above. Any small contribution adjustment in his favour is heavily outweighed by the s.75(2)(o) of the Act matters. I have taken into account the parties income disparity but balanced against that is the wife’s need to pay rental accommodation in the two years since separation; the interest on the loans taken out by her in circumstances where the husband has had complete control of the monies of the parties; the husband’s ability to obtain rental receipts for the use of Property M, past, present and into the future; and the wife’s own age approaching 65 years.
Sixty per cent of the asset pool is a sum of $1,387,383. Forty per cent is $924,922. The wife has already $506,622. Thus, a payment from the husband to the wife of $880,761 is required. Should the husband take on the liability for the mortgage over the former matrimonial home then a payment of $880,761 less $90,170 is required. This is a sum of $790,591.
The further question I have considered is whether there should be some amount paid to the husband to compensate him for the legal costs paid by the wife from her superannuation monies. This is an amount of $143,251. The husband argues it should be added back into the asset pool. I decline to do so in the exercise of my discretion. The husband’s legal costs have been paid out of superannuation monies and these are $140,000. Further, he has had complete control of the entirety of the sale proceeds and provides a blanket “farm expenses” response to the expenditure of significant sums. He has been able to determine in what manner such expenditure has proceeded without reference to the wife.
The orders which the Court shall make are just and equitable in all the circumstances. They give the husband an opportunity to retain his sole proprietorship of Property M and enable him to retain security against which to borrow to pay out the wife. The husband has at his disposal plant and equipment which he can sell, he being in the end years of any form of employment. The wife will have the benefit of her not insignificant superannuation monies, her income and a large capital sum to re-establish herself.
The wife sought orders at conclusion which included a splitting order with respect to her superannuation entitlements. I do not propose to adopt that course. There is sufficient other assets and capacity to borrow to effect a just and equitable division of property as between the parties with the wife retaining her superannuation entitlements. This is particularly so because the husband will retain Property M pursuant to these Orders.
I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of Judge Hartnett
Associate:
Date: 24 September 2014
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Costs
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Remedies
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Injunction
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