Napier and Scully
[2016] FCCA 1919
•26 July 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| NAPIER & SCULLY | [2016] FCCA 1919 |
| Catchwords: FAMILY LAW – Property – Application for property settlement – assets and liabilities – contributions of the parties – short marriage credibility of witnesses – unreliability of evidence of parties – whether any adjustment should be made in respect of factors under Family Law Act 1975 (Cth) s.75(2) – where there is one child aged 4 years – 10% adjustment in favour of Wife. |
| Legislation: Family Law Act 1975(Cth), ss.75, 79, 106A |
| Cases cited: Anastasio & Anastasio (1981) 7 Fam LN Note 8; FLC 91-093 Black & Kellner (1992) 15 Fam LR 343; FLC 92-287 Hickey & Hickey (2003) 30 Fam LR 35; FLC 93-143; [2003] FamCA 395 Kardos v Sarbutt [2006] NSWCA 11 Norbis v Norbis (1986) 161 CLR 513; 10 Fam LR 819; FLC 91-712 Sharpless v McKibbin [2007] NSWSC 1498 Stanford v Stanford (2012) 247 CLR 108; 47 Fam LR 481; FLC 93-518 Weir & Weir (1992) 16 Fam LR 154; (1993) FLC 92-338 |
| Applicant: | MR NAPIER |
| Respondent: | MS SCULLY |
| File Number: | SYC 992 of 2013 |
| Judgment of: | Judge Scarlett |
| Hearing dates: | 4-6 March, 13-14 October, 11 December 2015 |
| Date of Last Submission: | 5 February 2016 |
| Delivered at: | Sydney |
| Delivered on: | 26 July 2016 |
REPRESENTATION
| Solicitor for the Applicant: | Mr Papanicolau |
| Solicitors for the Applicant: | KP Lawyers |
| Counsel for the Respondent: | Mr Johnson |
| Solicitors for the Respondent: | Lawside Lawyers |
ORDERS
Within forty-two (42) days of the date of these Orders the Respondent Wife is to pay to the Applicant Husband the sum of $678,993.00.
Simultaneously with the payment of the said sum of $678,993.00:
(a)The Husband is to sign all documents and execute all deeds and instruments and do all acts and things necessary to transfer to the Wife all of his right, title and interest in the property situate at and known as Property E in the State of New South Wales being the whole of the land in Folio Identifier (omitted); and
(b)The Wife is to refinance the mortgage over the said property at Property E with (omitted) Bank into her sole name.
The Wife is declared the sole beneficial owner at law and in equity of the home unit situate and known as Property M in the State of New South Wales being the whole of the land in Folio Identifier (omitted).
Other than as provided in these Orders the Husband is declared the sole legal and beneficial owner to the exclusion of the Wife of:
(a)all items of personalty, chattels, goods, furniture, furnishings, bank accounts and motor vehicles in his name or possession; and
(b)any monies, superannuation entitlements and benefits, shares, debentures, employment entitlements and businesses in his name or possession or control.
Other than as provided in these Orders the Wife is declared the sole legal and beneficial owner to the exclusion of the Husband of:
(a)all items of personalty, chattels, goods, furniture, furnishings, bank accounts and motor vehicles in her name or possession; and
(b)any monies, superannuation entitlements and benefits, shares, debentures, employment entitlements and businesses in her name or possession or control.
The Husband is to indemnify the Wife and keep her indemnified in respect of all loans made to the parties by Mr D.
In the event that the wife fails to pay the said sum of $678,993.00 within forty-two (42) days of the date of these Orders the parties must forthwith and within fourteen (14) days sign all documents and execute all deeds and instruments and do all acts and things necessary to list the said property at Property E in the State of New South Wales for sale by public auction with a Real Estate Agent to be agreed upon by the parties.
If the parties fail to agree upon the appointment of a Real Estate Agent within the time specified by Order (7) above then the President of the Real Estate Institute of New South Wales shall nominate a Real Estate Agent and the costs of and incidental to this nomination are to be borne equally by the parties as and when they fall due.
The parties are to instruct such Solicitor or Conveyancer as they shall agree upon to have the conduct of the sale of the said property on behalf of the parties or in the absence of agreement being reached within the time specified by Order (7) above then the President of the Law Society of New South Wales is appointed to nominate a Solicitor to undertake the conveyancing of the said property at Property E and the costs of and incidental to this nomination are to be borne equally by the parties as and when they fall due.
The parties are to make the keys to the said property at Property E available to the Real Estate Agent for the purpose of allowing inspection of the said property at all reasonable times as requested by the Real Estate Agent.
The parties must ensure that the said property at Property E including the grounds is in a neat and clean condition at the time of any inspection by the Real Estate Agent and any prospective purchaser.
The parties must sign all documents as requested by the Real Estate Agent in relation to the listing for sale of the said property at Property E except a Contract or Agreement for Sale which has not been authorised by the parties’ Solicitor.
The reserve price for the purpose of the auction is to be $1,150,000.00.
In the event that bidding at the auction does not reach the reserve price then the parties may negotiate with the highest bidder and any other interested person and effect the sale of the said property at a price which is not more than 5 per centum below the reserve price.
If the said property at Property E remains unsold the parties must forthwith do all acts and things and sign all documents necessary to re-list the property for sale by auction again on a date nominated by the Real Estate Agent.
The Husband must execute the Contract for Sale in the form prepared by the Solicitor at a price agreed between the parties or at a price obtained at auction.
The Husband and Wife must jointly instruct the Solicitor and such instructions are to be in writing only and any conversations between a party and the Solicitor or the Real Estate Agent must be immediately advised to the other party and the Solicitor and the Real Estate Agent are not to accept verbal instructions from the parties or their respective solicitors.
Upon completion of the sale of the said property at Property E the parties must divide the proceeds of the sale in the following manner and priority:
(a)payment of all Real Estate Agent’s commission and advertising costs and expenses;
(b)payment of all legal costs of the conveyancing;
(c)discharge of the mortgage to (omitted) Bank;
(d)in payment to the Husband of the sum of $678,993.00 referred to in Order (1) above together with interest as provided by the Federal Circuit Court Rules 2001 from the due date for payment until paid; and
(e)as to the net balance to the Wife.
In the event that either party refuses or neglects to execute any deed or instrument within seven (7) days of that deed or instrument being forwarded to him or her or his or her solicitor then the Registrar or a Deputy Registrar of the Sydney Registry of the Court is appointed under the provisions of section 106A of the Family Law Act 1975 to execute such deed or instrument in the name of the party who has refused or neglected to do so and to do all acts and things necessary to give validity to the operation of the deed or instrument and the party in default must pay all reasonable costs incurred by the party not in default for the purpose of enforcing this Order.
If either party seeks an order for costs of these proceedings that party must file and serve an Application in a Case and an affidavit in support setting out the amount of costs sought and the basis upon which those costs are calculated within one (1) month of the date of these Orders.
IT IS NOTED that publication of this judgment under the pseudonym Napier & Scully is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 992 of 2013
| MR NAPIER |
Applicant
And
| MS SCULLY |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application for orders for property settlement brought by the Husband. After a hearing that occupied six entire hearing days, the parties’ lawyers filed written submissions setting out the orders sought by their respective clients. In summary, the Husband seeks orders providing that:
a)Within 42 days the wife should pay him the sum of $678,993.00.
b)At the same time, the Husband will transfer to the wife all of his interest in the jointly owned property at Property E, New South Wales and the Wife will refinance the mortgage over the Property E property with the (omitted) Bank.
c)The Wife should be declared the sole beneficial owner of a home unit at Property M, New South Wales.
d)The parties would otherwise retain all items of personal property, including bank accounts and superannuation interests in their own names.
e)The Husband would keep the Wife indemnified in respect of any loans made to the parties by his father, Mr D, and;
f)If the Wife fails to pay the sum of $678,993.00 to the Husband within 42 days, the property at Property E should be submitted to auction for the purpose of obtaining for the Husband that sum of money together with interest.
For her part, the Wife seeks orders against the Husband in these terms:
a)That she be declared, as against the Husband, the sole beneficial of the property in Property M.
b)Within 28 days, the Husband should transfer to the Wife all of his interest in the property in Property E.
c)The Wife should pay to the Husband a sum equivalent to 50 per cent of the net value or equity in the property at Property E and cause the current mortgage on the property to be discharged.
d)The parties should each receive 50 per cent of the remaining balance in an offset account with (omitted) Bank, and;
e)Otherwise, the parties should be declared the sole owners of all property in their name, possession or control.
In the alternative, the Wife seeks orders that:
a)She be declared the sole beneficial owner of the property in Property M.
b)Within seven days the parties should list the property at Property E for sale and divide the proceeds of sale in this manner:
i)payment of legal costs and disbursements and agents’ commission;
ii)discharge of the mortgage over the property, and;
iii)divide the balance of the purchase money equally between the parties;
c)each party would receive 50 per cent of the balance in the remaining offset account with (omitted) Bank;
d)otherwise, the parties be declared the sole owners of all property in their name, possession or control, and;
e)the Husband should pay the Wife’s costs.
Background
It was a very short marriage. The parties were married on (omitted) 2011 and separated on 18th January 2012. The Husband was born on (omitted) 1975. He has recently attained the age of 41 years. The Wife was born on (omitted) 1979. She is 37 years of age. There is one child of the marriage, a little girl called X who was born on (omitted) 2011. X is four years old. Orders were made by consent in this court on 6th May 2013 providing that the child should live with the Wife and spend time with the Husband.
Evidence
The final hearing took significantly longer than originally anticipated. It commenced on 4th March 2015 and ran to 6th March. It was then adjourned part-heard and recommenced on 13th October and continued on 14th October 2015. The matter was then adjourned part-heard to 11th December when the last evidence was taken.
The Husband relied on the following documents:
a)his Amended Initiating Application filed on 11th September 2013;
b)his affidavit sworn on 30th April 2014;
c)the affidavit of his father, Mr D, sworn on 31st May 2013;
d)the affidavit of Ms D, a valuer, of 22nd February 2015;
e)the further affidavit of Ms D affirmed on 12th October 2015 and filed in court the following day;
f)the Husband’s financial statement filed on 26th February 2015, and;
g)the Husband’s further affidavit sworn on 27th February 2015.
The Wife relied upon the following materials:
a)her Response to final orders filed on 6th May 2013;
b)the affidavit of Ms Y (the Wife’s mother) sworn and filed on 30th April 2014;
c)the Wife’s affidavit sworn and filed on 30th April 2014;
d)the financial statement of Ms Scully, the Wife, filed on 30th April 2014.
The Wife also sought leave to rely on her affidavit of 9th February 2015.
Ms D was not required for cross-examination. The Husband and his father both gave oral evidence and were cross-examined by Mr Johnson of Counsel for the Wife.
The Wife and her mother both gave oral evidence and were cross-examined by Mr Papanicolaou for the Husband.
It is a matter of note that the evidence of both the Husband and the Wife was, at times, untruthful.
The assessment of the case of each party was made more difficult by the need to assess which of the two parties was less untruthful. My contemporaneous notes of the Husband’s cross-examination on 5th March 2015 were that he appeared to be very lax with the truth and had a serious credibility problem when giving evidence about information he had provided to the Child Support Registrar.
Again, the Husband was asked by Mr Johnson about having made a loan to his brother. He denied lending his brother any money and was then confronted with a loan agreement between himself and his brother dated 1st July 2009, where his brother, Mr B, acknowledged borrowing from him an amount of $61,932.95. The document was signed by both the Husband and his brother.
The Husband’s father’s evidence in cross-examination later that same day did not appear to be untruthful. He corroborated his son’s evidence that the Wife frequently used violence on him. I might comment that there were mutual allegations of domestic violence and it certainly appears that the relationship between the parties in the relatively short time that they were together was a tempestuous one, to say the least.
The Wife’s cross-examination extended over 13th and 14th October 2015. My contemporaneous notes of her evidence on 14th October when she was being asked by Mr Papanicolau for the Husband about her dealings with the Office of State Revenue were to the effect that the Wife was clearly not telling the truth and her evidence was totally unbelievable. It would appear to me, on balance, that the Wife’s evidence overall was less credible than that of the Husband.
Submissions
The parties’ lawyers provided detailed and helpful submissions. Mr Papanicolau submitted for the Husband that on his client’s calculation of the net asset pool of $1,369,957.00, 60% of the asset pool would equate to $821,975.00, being rounded out to $822,000.00, which would result in the parties’ positions being as set out in an attached schedule which he attached to his submissions.
On consideration, the Husband’s proposed orders are just and equitable and taking into account the Husband’s higher contributions and the resources available to the Wife being an only child and that the parents will be meeting the discharge of the mortgage over the Property E property and the payment of the capital sum, Mr Papanicolau submitted that it would not place any extraordinary onus on the Wife and would allow her to retain the Property E property as she had expressed a desire to do so in the proceedings.
In respect of the law to be applied, Mr Papanicolau submitted that in most cases courts adopt a global approach to the division of assets. In some cases related to short marriages, however, courts adopt an asset-by-asset approach. It was submitted that on the evidence, most of the moneys towards the purchase of the Property E property were provided by the Husband and his family.
The High Court has held in Norbis v Norbis[1] that there is no binding principle controlling the exercise of the Court’s discretion in the division of property. The significance of an asset-by-asset approach is that the Property E property, even whilst awaiting a hearing of these proceedings, was funded by a joint account fund which the Wife used to draw down to meet the mortgage repayments which stood at $95,000.00 at separation and was nil by the time these proceedings were heard.
[1] (1986) 161 CLR 513; 10 Fam LR 819; FLC 91-712
Throughout the course of the marriage, he submitted, apart from some minor contributions by the Wife towards living expenses and the mortgage, the funding of the Property E property was from the Husband’s income. The Wife kept a separate account, channelling the rental of the Property M unit together with her income and large taxation refunds towards the repayment of the Property M unit.
Immediately upon separation, the Wife drew down on the mortgage $125,000.00 to pay to her mother, stating that this was money that had to be repaid to her mother. The Wife continued to maintain that the property is to be transferred to her parents with no inclusion even if that proposition is correct for the return of those funds to the asset pool. Mr Papanicolau referred the Court to the decision of Anastasio & Anastasio[2] where the parties had cohabited for 14 months. Both parties had savings at the time of the marriage and had worked during the cohabitation.
[2] (1981) 7 Fam LN Note 8; FLC 91-093
In that case, his Honour Baker J concluded that the wife’s earnings represented 22.78% of the parties’ total income and whilst his Honour stated that he was not ordinarily attracted to a mathematical approach having regard to the facts and, in particular, the shortness of the marriage he held that each party should take what they contributed to it directly financially. Allowing for an adjustment in this case is there is a young child for section 75(2) factors, it was submitted that this is a possible approach should an asset-by-asset assessment be undertaken.
Mr Papanicolau submitted that the assets, including superannuation and including an add back of $95,000.00, being a reduction by the Wife of the offset account, would lead to total assets of $2,089,107.00. Liabilities were a personal loan to the Husband’s father, Mr D, of $85,000.00 which he submitted was the Husband’s debt; the home loan which he submitted was a joint debt of $451,000.00; a home loan from the (omitted) Bank which was the Wife’s debt of $198,000.00; the Husband's (omitted) MasterCard at $3000.00; and the Wife’s personal loan at $9,000.00, giving total liabilities of $746,000.00, taking the parties’ net assets at the date of hearing to $1,343,170.00.
Mr Papanicolau noted that the parties have agreed that the value of the Wife’s motor vehicle at the commencement of the hearing was $6,000.00. The Wife, during the course of the proceedings, has maintained and continued to maintain that the Property M unit is held by her on trust for her parents. It was submitted that all the indicia of ownership and declarations made by the Wife to financial institutions for the funding of the unit, being rent paid by tenants, representations made to the revenue authorities, including the Deputy Commissioner of Taxation and the Office of State Revenue, have declarations stating that the Wife is the owner of the property.
In the application for finance lodged by the Wife when purchasing the Property M unit, Mr Papanicolau noted that:
a)The trustee details are left blank, the deposit moneys for the unit being described as her own savings and not been given to her or by way of trust by the Wife’s parents;
b)The lodgement of the first home owner’s grant and stamp duty exemption whereby, at the time, the Wife declares to the Office of State Revenue that she is not in any de facto relationship, contrary to her assertions in her affidavit as to the length of the relationship with the Respondent’s Husband;
c)That she is buying a property for herself and not pursuant to any trust as alleged in the proceedings;
d)That she would be living in the unit and not renting the unit, contrary to the evidence.
e)The wife proceeded to lodge tax returns with the Deputy Commissioner of Taxation claiming ownership of the unit, claiming expenses, including interest on loans, excessive expenses for other costs and renovations in relation to the unit;
f)It was submitted that from the photographic evidence provided by the valuer, there had been no extensive renovations to the kitchen or bathroom for the Property M unit warranting the claims in the tax return lodged by the Wife for the financial year 2012/2013 in the sum of $34,000.00;
g)The bank statement showing what is described as rental being paid into the Wife’s account;
h)The bank loan statements being in the Wife’s name.
i)Since the commencement of the proceedings, no application in a case for a joinder had been filed by the Wife’s mother and father nor any declaration sought by them from the Court to declare the unit as belonging to them;
j)Further, no lodgement of any trust tax returns on behalf of the Wife or her mother and father;
k)again, an allegation that the parents could not purchase the unit in their sole name because they were not permanent residents of Australia when it would have been a simple matter to lodge an application form with the Foreign Investment Review Board to obtain approval to purchase the unit; and,
l)Finally, the Wife applying all of the child’s child support, her income and rental income to the reduction of the loan on the Property M unit without attempting to repay any of the mortgage on the Property E property. This occurred during the course of the parties’ short marriage.
Mr Papanicolau went on to say what further impacts on the indicia of ownership was that the Wife, after the part-heard proceedings on 6th March 2015 and due to the cross-examination, filed a reassessment with the Australian Taxation Office. Apart from producing a Notice of Reassessment from the Australian Taxation Office, the Wife failed to produce the amended tax return as required by the Court’s disclosure requirements. In fact, the only material produced at the last hearing was:
a)an email by the conveyancer seeking to confirm the Wife’s allegations. She was advised that she could not purchase the home unit in Property M in her parents’ names as they were not permanent residents.
b)little weight, it was submitted, should be given to this evidence by the conveyancer. The evidence was not in an affidavit and was not tested under cross-examination. As a matter of law it was incorrect. The conveyancer could have advised the Wife that her parents could make an application to the Foreign Investment Review Board for approval and approvals are not declined for small residential purposes.
c)no trust tax return was submitted to the Deputy Commissioner of Taxation, nor was the Deputy Commissioner of Taxation advised of the allegations of the Property M unit being held in trust by the Wife when she filed her amended tax return.
d)Had the Wife been truthful in her amended tax return, it would have resulted in all the losses and claims by the Wife being declined for each financial year since she purchased the unit and being reassessed for all the financial years on her income earnt without the application of any negative gearing.
It was submitted further, that after being untruthful and continuing to be untruthful to the Australian Taxation Office and the Office of State Revenue, the Wife was seeking the assistance of the Court to exclude the Property M unit from the parties’ assets. It was submitted that this would be against public policy in a court, lending assistance to what is an illegality.
Further, during the course of the proceedings, the Wife alleged that her mother and her father made significant contributions towards the parties’ assets and that the Wife contributed $40,000.00 to the Property E property. The Wife did not produce any bank statements or documentary evidence to support that claim and, in fact, during oral evidence in the proceedings she increased that amount to $101,000.00 with no documents.
Mr Papanicolau submitted that this should be discounted on three factors:
a)that shortly after the separation in January 2012, the Wife drew down on the parties’ joint account and further, on the (omitted) loan account thereby increasing her liability to diminish her financial position in these proceedings in the order of $120,000.00. The funds were paid as for the direction of the Wife’s mother;
b)the Wife’s mother, under cross-examination, initially declined to accept that the moneys were repaid to her and her husband but to other associates nominated by the Wife’s mother, and;
c)the characterisation of moneys received by the Wife over a period of time included moneys received by the Wife for her ongoing living and tuition expenses prior to the parties even meeting or the purchase of the Property M unit and the Property E property.
Mr Papanicolau submitted that the Husband, for his part, had admitted that he received moneys from a retrenchment package which in accordance with the tradition of (nationality omitted) families, was given to his father, Mr D, to control. Significantly, these funds were received well prior to the parties’ marriage. No contribution was made by the Wife to those funds.
The funds were subsequently borrowed back from the Father to purchase, at first, a Queensland investment property and then further funds were given by the Father from his bank account as set out in the Father’s affidavit to purchase the Property E property. The Father also gave the Wife the cash, less the cost of the wedding reception amounting to $17,998.00. The Wife included that amount as her contribution to the Property E property. It was submitted on the part of the Husband that most of the guests at the wedding were from the Husband’s side as the Wife did not have any extensive family living in Australia.
Further, throughout the course of the short marriage there were separate accounts operated by the parties. The Wife applied, largely, all her income including the large tax returns towards the Property M unit loan, reducing it to $85,649.00 shortly before the parties’ separation and before the drawdowns. The Husband applied all of his income towards the benefit of the parties, including meeting the mortgages on the property at Property E and the parties’ living expenses.
The Wife alleged that joint funds in excess of approximately $100,000.00 were used by the Husband’s father to construct a granny flat at the rear of their property. This was denied by both the Husband and his father. No evidence was provided throughout the proceedings despite a Notice to Produce being served on the Wife’s solicitors to produce such documents. During the course of cross-examination, the Wife conceded that she had made no financial contribution to the granny flat.
Whilst the Husband, throughout the proceedings, claimed that the moneys received from his father were loans, Mr Papanicolau conceded that on the evidence, the Court would find that part of the money or the Husband’s initial money is given to the Father and then simply being returned to him. This, together with his response to the Wife’s child support application is the only factors that go to the credit of the Husband.
Mr Papanicolau submitted that this would not impact on the direct financial contribution toward the purchase of the Property E property by the Husband. Whether the Court characterised the moneys owed to the father to purchase the Property E property or direct moneys contributed to the property by the Husband, it was a direct contribution to the purchase of the Property E property by the Husband which is significantly higher than any contribution to which the Wife could point.
The Husband at the commencement of the marriage had a significant superannuation account balance and received a large retrenchment payment and had purchased the property in Queensland. Due to the short marriage and the Husband paying for the majority of the living expenses this, Mr Papanicolau submitted, should significantly increase the Husband’s entitlement to the net pool of assets.
Indirect and non-financial contributions
Throughout the course of the marriage it was submitted the Husband and Wife lived with the Husband’s parents rent-free. This allowed the Wife to continue to rent the Property M unit, reduce her mortgage and allowed the parties to save money. Since the parties separated, the Wife has dissipated the parties’ assets by living in the property at Property E, refusing to sell the property and reducing the joint account of $95,000.00 to nil whilst the proceedings were awaiting hearing.
It was submitted that the sum of $95,000.00 should be added back. As to the proposed payback, the Wife had since separation continued to live in the Property E property, earn rental in respect of the Property M unit and apply the rental, the child support and her income until the last few months preceding the previous hearing towards the repayment of the (omitted) Bank mortgage for her own purposes. Mr Papanicolau submitted that the Court should adopt the balance sheet which he submitted.
Mr Papanicolau did not accept any proposed submission on behalf of the Husband that the parties derived a benefit by the increase in value of the properties. The values were much the same. It was submitted that it would be of no point to say that some advantage would be derived by the Husband in having the value to the Property E property increased to $1,150,000.00, when any moneys received from the sale or any sum directed by the Court to him would place him at the disadvantage of:
a)having to pay a higher price for the property that he is purchasing;
b)borrow more moneys to purchase the same property; or
c)pay a higher rate of stamp duty.
Having regard to those circumstances, it was submitted that it was appropriate for the Court to add back the sum of $95,000.00 dissipated by the Wife during the period that this matter took to hear. Mr Papanicolau submitted that it was an accepted principle in short marriages that the weight of the initial contribution by the contributor will be greater where the increase in value has come about by market forces as opposed to the contribution of either party. No significant renovations were carried out to the Property E property and the value increased through market forces.
Mr Papanicolau referred to a decision of Kardos v Sarbutt[3] which was a case concerning a three‑year relationship where there were no children. Whilst at first instance the trial judge returned to the parties their initial contributions and then divided the uplift in assets that had occurred equally on appeal a different approach was taken and Brereton J held that the approach taken at first instance gave manifestly inadequate weight and significance to the initial contributions of the parties in the short relationship. His Honour set aside the trial judge's decision in favour of an overall division of sixty‑forty which reduced the payment ordered from the contributor to the non‑contributor.
[3] [2006] NSWCA 11
Further, in Sharpless v McKibbin[4], Brereton J again considered his earlier decision in Kardos & Sarbutt and said:
I did not intend to suggest that any increase in value in assets initially contributed should be regarded, in all the circumstances, as entirely a contribution by the party who contributed those assets, nor that there was an onus on the other party to prove that the initial contribution should not be eroded; but that it is necessary to weigh the initial contributions of a party with all other relevant contributions of both parties, and that in doing so, regard must be had to the use made by the parties of the initial contributions, and that it was inappropriate to routinely regard increments in value of assets so introduced as the produce of equal contributions by both parties.
[4] [2007] NSWSC 1498
Mr Papanicolau submitted that in respect of the domestic violence factors, the wife had alleged that throughout the course of the short marriage there were incidents of violence. The Husband denied that and it was submitted that in respect of the incident complained about in January 2012 it was the Husband who suffered injuries. When the police attended there were no charges laid nor was an apprehended domestic violence order issued against either party having regard to the conflicting evidence by the parties involved.
The Wife had alleged that there were significant injuries inflicted upon her during the course of the marriage and during her pregnancy. Again, this was denied by the Husband. One incident that the Wife alleged was that the Husband had jumped on her stomach whilst she was pregnant. Mr Papanicolau noted that the Husband weighed 85 kilograms and the Wife did not miscarry as a result of this alleged assault.
Mr Papanicolau turned his attention to factors affecting the credibility of the Wife. He was in fact most critical of the Wife's credibility. She obtained a university degree in Australia and obtained a distinction in (course omitted). However, she represented to the Court that she needed an interpreter throughout the course of the proceedings. Yet, during the proceedings, the Wife used the English language and made little or no use of the interpreter. She is employed in Australia where it is necessary for her to speak English. During cross‑examination she claimed that she was not aware that it was illegal to claim or lodge the first home owner's grant and tax return claims. She placed the lodgement of the incorrect taxation returns on her father‑in‑law, stating in her evidence that the Husband's father told her to do it. As to the first home owner's application she blamed the Husband.
It was submitted that the onus in executing any declarations for first home owner's grant, stamp duty exemption and taxation returns rests on the person making the declaration, lodging the application and the tax return and not on some other party's advice. Further, it was submitted that throughout the course of the proceedings, the Wife sought to attribute blame and make allegations that were both self‑serving to increase her contribution and to diminish her assets. She continued to allege that the unit was purchased in trust by her parents notwithstanding that the drawdowns on the loan of $125,000.00 would have repaid any advance to her.
Again, the Wife totally discounted any income that she would have earned and any savings whilst living with her aunts and working in Australia after graduation and prior to the purchase of the Property M unit, to give an impression to the Court that all moneys were contributed by her parents. She sought to increase her financial contribution by stating that moneys received from her parents towards the unit which would have been applied to tuition and living expenses whilst studying in Australia.
She lodged a child support review application without disclosing the rental being received from the Property M unit. She claimed she was meeting the mortgage and did not disclose the drawdown of $125,000.00 in her application. Further, the Wife filed an amended return for one financial year with the Australian Taxation Office and she still claimed ownership and she did not advise the Deputy Commissioner of Taxation of the trust.
The Wife represented to the Court that her most recent Notice of Assessment had not been processed by the Australian Taxation Office but the following day produced an assessment which disclosed that her return was the subject of an audit for false claims and rebates. The Wife failed under a Notice to Produce to provide a copy of a loan application that she had approved in her name to pay out the Husband, even though she deposed to that fact in an earlier affidavit filed in the proceedings.
Her failure to disclose such a document entitles the Court to infer that she would still be alleging ownership of the Property M unit and its rental income to the financier. The Wife failed as required by law to lodge the bond money received from tenants with the government authority. She failed to write and advise the Office of State Revenue that the unit in Property M was held in trust and that she was not entitled to a stamp duty exemption and a first home owner's grant. She gave evidence that it was all cleared over telephone calls. In cross‑examination, she was evasive and argumentative.
As to subsection 75(2) factors, Mr Papanicolau conceded an adjustment of 10% should be made in favour of the Wife on the basis that the Wife has the primary care of the parties' child. The Husband does pay child support and Mr Papanicolau noted that the Wife's parents are now permanent residents of Australia; they’re able to assist with the care of the child. The Wife has the capacity to continue to earn significant income and has appropriate tertiary qualifications. She also has significant resources available to her, and Mr Papanicolau submitted that it was doubtful whether the Wife's parents would go to the expense or seek to have the Property M unit transferred to them because this would involve payment of stamp duty by them and Capital Gains Tax by the Wife.
Even if the Court were not prepared to add back the sum of $95,000.00 dissipated by the Wife, it was submitted that the Court should adjust the percentage of the parties' assets that the Husband received in his favour. Mr Papanicolau submitted that the parties were entitled to receive the property and contributions that they made to their assets. As the Wife has repaid to her mother any moneys allegedly contributed by her parents towards the purchase of the Property M unit, this should be included in the asset pool.
The Husband and his family contributed significant funds towards the purchase of the property at Property E and since separation the Wife used a joint account to meet the mortgage payments. Mr Papanicolau submitted that on contribution, the Husband should receive 70% of the net assets which after adjusting for subsection 75(2) factors, should amount to 60% to him and 40% to the Wife. The Husband would seek an order that if the Wife did not pay the money sought, there should be a sale of the property at Property E for the purpose of providing him with the money.
Mr Johnson of Counsel submitted that his client sought orders that she be declared the beneficial owner in law and equity of the Property M property, that the property at Property E should be sold and that she should pay the Husband an amount equal to 50% of the equity. In the alternative, so far as the Property E property was concerned, should that property be sold, the net proceeds be distributed equally between the parties and that they should retain their respective superannuation and retain what other properties may be in their possession and control at the time of the orders.
Mr Johnson submitted that there were four significant issues:
i)When did cohabitation commence?
ii)Should the property at Property M be regarded as part of the pool of matrimonial assets?
iii)The issue of the purchase by the Husband of the property at Property G in Queensland; and,
iv)Whether there was a loan existing between the Applicant Husband and his father or, as asserted by the Applicant, that this was a loan between the parties and the father.
As to the issue of when cohabitation commenced, it was submitted that the Respondent's case was that she started living with the Husband from about May 2008. She fell pregnant in (omitted) 2008, with that pregnancy being terminated in about (omitted) of that same year. She points to the Husband's affidavit of 30th April 2014 in which he said that the Husband and Wife intended to buy a property together and marry in mid‑2009 and says that this was a further indication of a common commitment to each other and supports cohabitation since May 2008. It appeared to be common ground that full‑time cohabitation commenced in July 2010 when the parties purchased the property at Property E.
Dealing with the issue of whether the property at Property M should be regarded as part of the pool of matrimonial assets, Mr Johnson submitted that the Respondent points to her evidence of purchase that all of the money required to purchase the Property M property was provided by her parents. She provided a cogent reason of why it was not purchased in their name at the time as they were not in Australia at the time but had asked the Respondent to purchase the property for them so that they could eventually live there.
The evidence of both the Applicant and her mother, Ms Y, support that contention it was submitted. The property was registered in the Wife's name but the Wife said that the registration was in name only, except that she had claimed the first home owner's grant on her own behalf at the time of filing her tax returns and had claimed for deductions in her own name. The Wife identified and had given evidence that she identified the issues appearing in her tax return and raised in her evidence that the advice that she had received from the Office of State Revenue was that she had not breached any of the rules regarding the first home owner's grant and she further stated that she had filed amended tax returns relating to deductions claimed in relation to the Property M property and she said that no action had been either contemplated or commenced by either the Australian Taxation Office or the Office of State Revenue either before, during or after the parties' relationship.
It was common ground it was submitted that the Husband had made no material contribution, financial or non‑financial towards the acquisition, maintenance or improvement of the property. Thus, it was submitted that the property should not be regarded as part of the pool of matrimonial assets. In the alternative, if it is to be part of the matrimonial assets, it's clearly a major contribution on behalf of the Wife to the asset pool.
The next issue was the purchase by the Husband in June 2006 or thereabouts, of a property at Property G in Queensland. During the course of cohabitation, the Husband accepted that he used common funds to pay the mortgage on the Property G property, as moneys from the joint offset account at the (omitted) Bank. The property was sold after the parties separated for a value of $380,000.00 and the proceeds of that property were distributed with no accounting of that to the asset pool of the parties.
The Wife said that a total of $52,017.56 was withdrawn from the parties' joint account to pay for the mortgage on the property at Property G and that the Husband withdrew an initial amount of $34,079.07 from the (omitted) Bank cash management account and a further $7,964.72 from his (omitted) Bank account and directed those funds to the Property G property. All of this, she says, was done without her knowledge or consent.
It was submitted that the Husband in his evidence said words to the effect that when the allegation was put to him, he had to use that money but he did not further deny that joint moneys had been used to support the Property G property but in fact, asserted he had to use the joint funds because he had to pay everything.
The fourth issue was whether there was a loan existing between the Husband and his father, or whether the loan is between the parties and Mr Napier. It was the Wife's position that at no time during the relationship was there any loan existing between the Husband and his father, or between the parties and Mr Napier, nor was there any loan existing between Mr Napier and the Wife, except for the loan of $5,000.00 from the parties in about December 2011, whereby they had lent Mr Napier about $5,000.00 to build a granny flat at his residence in (omitted).
The Wife asserted that the alleged loans were, in fact, moneys that the applicant had paid to his father over the course of his employment and the Father had in turn acted as a bank for the applicant and had effectively lent the Applicant's money back to him on a no‑interest basis. The Wife submitted that this is a sham loan being asserted and that any moneys used by the Applicant to purchase any assets of the marriage, in conjunction with her, with his funds and that the alleged loan of the Father should not be considered as a valid loan arrangement. At no stage did either the Husband or his father assert that the Wife was ever a party to any of these alleged loan arrangements.
It was submitted that the Court should not accept these alleged loans as legitimate for the following reasons:
a)The Husband's response to the Child Support Agency relating to the Mother's application to increase child support;
b)There were no references to any loan obligation to Mr D.
c)There was an assertion that the Husband was paying $3,000.00 per month in mortgage payments, when he was not making any payments at all.
d)The Husband was not using a motor vehicle at the time, yet he claimed car expenses.
e)The Wife submitted that the Husband was trying to mislead the Child Support Agency in this document and persisted in that misleading and untruthful evidence when questioned about it.
f)The assertions needed to be compared with the information contained in the Husband's financial statements; and,
g)The Husband asserted the payment by him of his redundancy payment to his father in 2009, an amount of some $65,000.00, was a repayment of loans owing to his father but no loan agreement supporting any of those payments was exhibited.
As to contributions of a financial nature by the Wife, it was submitted that she made direct financial contributions towards the property at Property E as follows:
a)$40,000.00 towards the initial purchase;
b)by way of contributions to the joint bank account with the (omitted) Bank from which mortgage payments were made, the sum of $86,059.37;
c)contributions made by her mother Ms Y towards the bank account of $8,690.17;
d)credit card purchases for the benefit of the Property E property in the sum of $6,477.36.
The Wife remained in the property at Property E shortly after separation and maintained that property and paid the mortgage on the property until the hearing. Those payments had been made initially from the joint account at the (omitted) Bank. When that was dissipated, the Wife paid the mortgage by herself from about October 2014. Those payments were approximately $3,300.00 per month, amounting to some $49,500.00, thus a total contribution of $150,543.24.
The Wife said that she was responsible during the course of the marriage and relationship for the cooking and cleaning of the premises and was responsible for the washing and ironing of the parties' clothes, including those of the child, X. Apart from working full‑time during the marriage up until the birth of the child, X, in about (omitted) 2011, the Wife was the principal home‑maker being responsible for the upkeep and maintenance of the property at Property E. She was responsible for all of the home‑making duties of the parties during the marriage.
Dealing with factors under subsection 75(2) of the Family Law Act, Mr Johnson submitted that the following matters were relevant:
a)the age and state of health of the parties;
b)the parties' income and financial resources;
c)It is the Wife who has the full‑time care of the parties' child, X, now four years of age.
d)The fact that the Husband is in full‑time employment on a more than adequate income whereas the Respondent's employment is tailored around her needs to care for the child, X because she intends to remain the child's primary carer.
It was further submitted under subsection 75(2)(k), the marriage was a relatively short marriage from 15th January 2011 to 18th January 2012, although the parties at least cohabited partly in about the middle of 2008, with full‑time cohabitation commencing in about July 2010, although cohabitation definitely concluded on 18th January 2012. Further, neither party was cohabiting with another person, except that the Respondent lives with X. The Applicant Husband lives with his parents.
Mr Johnson, too, addressed the subject of allegations of domestic violence, describing it as considerable and protracted during the relationship and the marriage. Some of this violence was witnessed by the Wife's mother, Ms Y. The Wife submitted that the Court should find those actions by the Applicant and his parents, which led to the end of the marriage on 18th January 2012, was systemic and continuous for reasons best known to the Husband and his parents.
Mr Johnson submitted that the effect of the Wife's proposed orders would be that:
a)If the Property M property was retained as a matrimonial asset, the Wife would receive 62.7% and the Husband would receive 37.3%, or if the Property M property were not retained as a matrimonial asset, the Wife would receive 46% and the husband 54%.
b)In both instances he submitted the Husband would retain his superannuation and all assets in his possession and control, plus a payment of $350,000.00 from the Wife, assuming the Property E property was not sold.
c)The Wife would otherwise retain all other assets in her possession and control. She would retain the Property E property and would be required to refinance the mortgage on that property. Orders consistent with those submissions would do justice and equity between the parties.
The proper approach to the determination of a property application
First of all, the Court must follow the decision of the High Court of Australia in Stanford v Stanford[5] and begin with the consideration whether it would be just and equitable to make a property order under subsection 79(2) of the Family Law Act 1975. The Court must consider this aspect before embarking on the four‑step process set out by the Full Court of the Family Court in Hickey & Hickey[6]. The four steps set out in that judgment at paragraph [39] require the Court to:
a)Make findings about the identity and value of the property, liabilities and financial resources of the parties.
b)Identify and assess the contributions of the parties.
c)Identify and assess the other factors in subsection 79(4), particularly the matters referred to in subsection 75(2); and,
d)Resolve what order is just and equitable in all the circumstances.
[5] 2012) 247 CLR 108; 47 Fam LR 481; FLC 93-518
[6] (2003) 30 Fam LR 35; FLC 93-143; [2003] FamCA 395
Just and equitable
The parties have been separated for over four years and there appears to be no likelihood that they will ever reconcile. They have been engaged in litigation since the Applicant filed his Initiating Application seeking parenting and property orders on 27th February 2013. The marriage between the parties is clearly at an end and in all the circumstances I am satisfied that it is just and equitable to make orders for the settlement of the parties' property.
The parties' assets and liabilities
One issue between the parties relates to the Wife's contention that the home unit in Property M is held by her on trust for her parents. I am of a view that for the reasons set out in some detail by the Husband's solicitor, the Wife's claim that the property is held on trust for her parents is not credible. The evidence does not support this claim and in my view that entire transaction is a sham. I am of a view that both the Property E property and the Property M property should be included.
This then would give the parties non‑superannuation assets as follows:
a)the property at Property E, jointly owned at the value of $1,150,000.00;
b)the property at Property M, owned by the Wife $620,000.00;
c)the Honda (omitted) motor vehicle $ 6,000.00;
d)Husband's savings with the (omitted) Bank - $ 2,000.00;
e)joint savings with the (omitted) Bank – $ 4,500.00;
f)Wife's savings with the (omitted) Bank - $ 600.00;
g)Wife's household contents - $10,000.00;
h)Husband's household contents - $500.00.
Total $1,793,600.00
Superannuation
The parties’ superannuation interests are:
a)Husband's (omitted) Super superannuation $140,507.00;
b)Wife's (omitted) super $60,000.00.
Total $200,507.00
Add-back
The add‑back would be the reduction by the Wife of the offset account at $95,000.00.
Liabilities
The parties’ liabilities appear to be:
a)Husband's personal loan from his father $85,000.00;
b)joint home loan (omitted) Bank $451,000.00;
c)Wife's (omitted) Bank home loan $198,000.00;
d)Husband's (omitted) MasterCard $3,000.00;
e)Wife's personal loan $9,000.00
Total $746,000.00
Net Assets
I find the parties’ net assets at the date of hearing including superannuation to be $1,343,107.00.
The contributions of the parties
The parties were together for only a short time, so the financial contributions are an important factor. If the Wife has repaid her mother any moneys allegedly contributed by her parents towards the purchase of the Property M unit, this should be included in the asset pool. The Husband and his family contributed significant funds towards the purchase of the property at Property E and since separation the Wife used the joint account to meet the mortgage repayments.
I am satisfied that the contributions should be assessed as at 70% to the Husband, 30% to the Wife.
Other factors taken into account under subsection 79(4) (d) to (g)
Paragraph (d) of subsection 79(4) requires the Court to take into account the effect of any proposed order on the working capacity of either party. There does not appear to be any likely effect on either party's working capacity from the orders which I propose to make.
Subsection 75(2) matters
Paragraph (e) of subsection 79(4) requires the Court to take into account the matters referred to in subsection 75(2) of the Act, so far as they are relevant.
The Husband was born on (omitted) 1975 and is in good health. He is 41 years of age. He is a (omitted) by occupation. He holds the degree of (qualifications omitted) from the University of (omitted). The Wife was born on (omitted) 1979 and she too is in good health. She is 37 years of age. She holds the degree of (qualifications omitted) from the University of (omitted). Both parties are working and have the physical and mental capability for gainful employment. Both parties have access to financial resources.
It is a significant factor that the Wife has the full‑time care of the parties' child, X who is four years of age, having been born on (omitted) 2011. X will attain the age of five years on (omitted) this year and presumably will commence school at the beginning of the first school term in 2017.
The Applicant Husband is in full‑time employment. The Wife's employment is modified around the needs of the child. The Wife intends to remain the child's primary carer.
It is most certainly a relatively short marriage from, in reality, 15th January 2011 to 18th January 2012. Neither party is in a relationship whereby they cohabit with another person. The child, X, lives with the Wife; the Husband lives with his parents. Neither party appears to have re‑partnered.
It was submitted that under paragraph 75(2)(o) of the Act, by Mr Johnson for the Wife, that she was the subject of considerable protracted domestic violence during the relationship and the marriage. The evidence of domestic violence to my mind was contradictory and unconvincing. It was the Husband's case that it was the Wife who was violent to him and not he to her. I am not satisfied that I should make an adjustment either way in respect of this matter.
Clearly, the one significant factor under subsection 75(2) is the fact that the Wife has the care and control of the child, X and I am of the belief that a 10% adjustment in her favour is appropriate in all the circumstances. Thus, I assess the contributions of the parties as 60% to the Husband and 40% to the Wife.
Orders
As to the orders to be made, it is my view that the orders proposed by the solicitor for the Wife are appropriate.
I am satisfied that in all the circumstances of this complex case, where there were significant clouds over the credibility of both parties, the orders proposed are just and equitable in all the circumstances. Whilst the evidence of both parties suffered from a lack of credibility, it was the evidence of the Wife that was far less credible than that of the Husband and I am of a view that where there was a disagreement between the parties on certain elements including the allegation of the family violence, the Husband's evidence should be preferred to that of the Wife.
Regrettably, both parties gave untruthful evidence and spent time avoiding and evading providing answers to questions about their respective financial positions. As I noted earlier, there were aspects of the wife’s evidence that were totally unbelievable. The Full Court of the Family Court has said in Black & Kellner[7]and Weir & Weir[8] that when the evidence of a party is unreliable and unsatisfactory, trial judges need not be unduly cautious in making findings in favour of the innocent party.
[7] (1992) 15 Fam LR 343; FLC 92-287
[8] (1992) 16 Fam LR 154; (1993) FLC 92-338
It may be commented here that the Husband can hardly be described as “innocent”, as I have made adverse comments about the credibility of his evidence too. However, the Wife’s evidence was far less credible. It is all a matter of degree.
I am satisfied in all the circumstances the proposed orders are just and equitable and I shall order accordingly.
I certify that the preceding ninety-five (95) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Date: 26 July 2016
4
2