Noakes and Fadden
[2016] FCCA 3134
•6 December 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| NOAKES & FADDEN | [2016] FCCA 3134 |
| Catchwords: FAMILY LAW – Property – division of assets of modest value – ridiculously small assets ignored for purpose of assessing overall pool. |
| Legislation: Family Law Act 1975, ss.60CC, 75(2), 79(4) |
| Cases cited: AON Risk Services Australia Ltd v Australian National University (2009) |
| Applicant: | MR NOAKES |
| Respondent: | MS FADDEN |
| File Number: | MLC 10377 of 2014 |
| Judgment of: | Judge Wilson |
| Hearing date: | 27 April 2016 |
| Date of Last Submission: | 27 April 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 6 December 2016 |
REPRESENTATION
| Applicant in person |
| Respondent in person |
ORDERS
The balance of the net proceeds of sale currently held on trust by Bardo & Erci Lawyers are applied as follows -
(a)two-thirds of the balance plus two-thirds of the total interest accrued on the balance (if any) to the wife; and
(b)one-third of the balance plus one-third of the total interest accrued on the balance (if any) to the husband,
with such funds to be released to the parties by Bardo & Erci Lawyers within 14 days of the date of these orders.
As described in the reasons for judgment, each party is liable for 50% of the following liabilities –
(a)(omitted) Frequent Flyer credit card;
(b)(omitted) MasterCard;
(c)(omitted) Bank Account;
(d)(omitted) Bank Account credit card;
(e)(omitted) MasterCard;
(f)(omitted) Mastercard; and
(g)(omitted) MasterCard.
As described in the reasons for judgment, the wife is solely liable for the following liabilities –
(a)the (omitted) overdraft;
(b)(omitted) Bank Account credit card;
(c)the debt to (omitted) Accountants;
(d)the legal fees due to Bardo & Erci Lawyers;
(e)(omitted) business car finance;
(f)amount owing to ASIC;
(g)(omitted) Visa credit card;
(h)any liabilities attached to the business (business omitted) and (business omitted).
As described in the reasons for judgment, the husband is solely liable for the (omitted) Bank variable rate loan.
Unless otherwise specified in these orders and save for the purposes of enforcing any monies or transfer of property due under these or any subsequent orders -
(a)each party is solely entitled, to the exclusion of the other, to all other property (including choses-in-action) in the possession of such party as at the date of these orders;
(b)monies standing to the credit of the parties in any bank account are to become the property of the party in whose name such bank account is held;
(c)each party is solely liable for and indemnify the other against any liability in that party’s sole name; and
(d)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
All extant property applications are dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Noakes & Fadden is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 10377 of 2014
| MR NOAKES |
Applicant
And
| MS FADDEN |
Respondent
REASONS FOR JUDGMENT
Introduction
When this litigation began, both parenting and property matters were in issue. Following the reservation of judgment after the trial of this proceeding, parenting issues have taken a different direction consequent upon the appointment of an Independent Children’s Lawyer (“ICL”). Parenting matters are still in play. These reasons for judgment address property matters only.
Synopsis
For the reasons that follow, in my judgment the property of the parties should be divided in the manner recorded in the orders pronounced above.
Short factual narrative
Mr Noakes (“the husband”) was born on (omitted) 1971. Ms Fadden (“the wife”) was born on (omitted) 1974. In (omitted) 2006 the husband and wife commenced their relationship and married on (omitted) 2008. They have one child of their marriage, X born on (omitted) 2011 (“the child”). On 15 May 2014 the wife and husband separated on a final basis. They are not yet divorced.
Prior to the wife’s and husband’s marriage to one another, the husband had been previously married from which he has two daughters, A born (omitted) 1998 and B born (omitted) 2000. The wife has two sons from a previous relationship, C born (omitted) 2001 and D born (omitted) 2004.
During the trial of this proceeding, the wife and the husband were not legally represented. That was their choice. However, I cautioned them about the wisdom of proceeding on an unrepresented basis. Each elected to proceed on an unrepresented basis. The wife and husband conducted the trial of this proceeding having no real appreciation of evidentiary matters including proofs of relevant issues. I gave each party considerable latitude to ensure that neither was disadvantaged in the running of this case. I also explained before commencing the case how each phase would be conducted, in accordance with the decision of the Full Court in Re F: Litigants in Person Guidelines.[1]
[1] [2011] FamCA 348.
Property matters
Despite the enormity of the affidavit material filed in this proceeding neither the husband nor the wife identified precisely what issues fell for my determination in relation to property issues. The husband’s amended case outline was largely discursive and unstructured.[2] The wife did not provide a case outline in any shape or form.
[2] Outline of case document of the husband filed 25 April 2016.
Consistent with the requirements of s.79 of the Act and of the observations of the High Court in Stanford v Stanford[3] (“Stanford”), the first matter to be addressed is the totality of the legal and equitable interests of the parties.
[3] [2012] HCA 52.
The proofs in this case were poor. That may have been explained by the fact that the wife and husband were not represented. In his case outline the husband formulated a collection of tables in which were recorded –
a)I -“table of monetary matrimonial assets”;
b)K - “table of non-monetary assets and what disputed”; and
c)L - “table of liabilities and what disputed”.[4]
The husband also set out the orders he sought with respect to property matters in paragraph D. Nowhere did the husband connect the so-called assets to the source of the evidence that underpinned his contentions about that asset or those assets. I make that observation being fully cognisant of the fact that the parties were not represented and they were not expected to have displayed the degree of preparation that legally qualified practitioners might display in the presentation of the case. That said, the poor presentation of this case made the task of determining key issues very difficult.
[4] Outline of case document of the husband filed 25 April 2016.
Further, the wife failed to comply with interlocutory orders made prior to the trial requiring her to produce various documents or to give discovery in relation to other documents.
The husband and the wife were specifically warned of the risks associated with a failure to prove one or more aspects of the case. The exchange was in the following terms –
HIS HONOUR: Now, I am required by law to explain to you certain things as to how the case will unfold but at the very outset I really should caution you, the family law jurisdiction is not an easy one and it’s an area fraught with danger for those who represent themselves. You choose to represent yourself, which is your right, of course, but you do run the risk of compromising your case in significant ways. If you do that you might fall foul of evidentiary issues. You might not have proved your case to the degree the law requires or there might be a whole range of other issues that you need to but because you are unrepresented, might not have taken into account.
It’s a brave person who represents herself or himself in this court where the stakes are high, as is the case in this case. If you tell me that you have given that due consideration and have chosen to bat on, so be it, but during the running of the trial there is only so much latitude that I can give if you transcend evidentiary rules, rules of court procedure, rules of law, questions of legal principle and the like. Now, if you want to explore as a last ditch attempt to get some legal help I will give you a short moment to do that. If you tell me that you are batting on, well, make sure you have regard to the fact that I warned you in the way I just have so what do you want to do?
MS FADDEN: Proceed, your Honour.
MR NOAKES: Yes, your Honour.[5]
[5] Transcript of Proceedings, 27 April 2016, at p.2.
The specific items in table I
One of the larger items that fell for division in this litigation was the sum of $119,815.94 described as the net proceeds of sale of the former matrimonial home and block of land at Property C. The sum of $119,815.94 is held by a firm of solicitors called Bardo & Erci Lawyers (“Bardo”) in its trust account, according to the husband.
The wife did not challenge the existence of that amount or that the sum was held by that firm of solicitors in its trust account. She contended that the money needed to be applied in a certain matter.
In order to understand how the sum of $119,815.94 came to be standing in the trust account of that firm of solicitors, it is necessary to examine the details of the parties’ ownership of the former matrimonial home. The task of unravelling the factual situation was made all the more difficult by reason of the fact that neither party exhibited documentation that proved certain issues. Nor did either party produce evidence of the flow of funds leading to the acquisition of particular assets.
The land and improvements at Property A was the parties’ former matrimonial home. The husband affirmed that it was purchased in February 2008 although the husband stated that the parties purchased it in February 2008 without identifying anything more, especially the source of funds used.
Evidence about the state of the parties’ asset position prior to their marriage was scant. It seems (and by that I mean I have deduced as much, there being little in the way of probative direct evidence on point) that several parcels of land were once owned by one or other of the husband and wife. Title searches of each would have assisted.
That said, the affidavit material revealed several parcels of real estate namely –
a)Property K;
b)the former matrimonial home at Property A;
c)Property S;
d)Property W; and
e)Property C.
Despite having trawled extensively through the extraordinarily large volume of affidavit material filed in this case, the task of ascertaining the financial position of the husband and wife at the commencement of their marriage was anything but easy.
In relation to the property at Property K the wife stated that at the commencement of her cohabitation with the husband, the land was valued at approximately $480,000.00 and that a mortgage of approximately $275,000.00 encumbered that land.
It was common ground that the wife and husband purchased the former matrimonial home for $485,000.00. The husband contributed $20,000.00 towards the purchase. It appears that the former matrimonial home was purchased in joint names, although no evidence of joint ownership was given, such as a copy certificate of title. The wife gave uncontradicted evidence that at the date of purchase, the mortgage relevant to the former matrimonial home was in the vicinity of $462,000.00.
One of the issues in this case was the extent of and quantification in the value of the financial and non-financial contributions of both parties to the former matrimonial home. The wife asserted that she had made both financial and non-financial contributions that she valued at approximately $35,000.00. The husband attributed a different value to his financial and non-financial contributions. In the passages below I have considered the competing contentions of each.
It was common ground that both the husband and wife paid half of a monthly amount due to the mortgagee in relation to the mortgage over the former matrimonial home.
Settlement of the sale of the former matrimonial home was effected on 10 October 2014. After the mortgagee was paid the sum of $465,000.00, it discharged its mortgage. Once a selling fee and various adjustments were made, the net proceeds of sale of the former matrimonial home were deposited into the trust account of Bardo, namely $76,952.14. One of the issues in this case is the manner in which that sum has to be disbursed.
The material filed by the wife revealed real estate at Property C . She exhibited a copy of a title search relevant to that land.[6] That search revealed that (business omitted) and (business omitted) (“(business omitted)”) was registered as the proprietor of the land on 8 October 2013. The search also revealed that (omitted) Bank was mortgagee. The search further revealed that the husband lodged a caveat over the title claiming an implied, resulting or constructive trust. The caveat itself, attached to the title search, revealed that it was lodged by the husband’s current partner, Ms D, the interest asserted being a constructive trust and that the husband was caveator. According to the wife, she encountered difficulties in procuring the withdrawal of the caveat. But settlement of the sale of Property C did take place on 16 December 2014. The apportionment of the proceeds of sale was an issue in this case.
[6] Affidavit of Ms Fadden sworn 12 January 2015 at exhibit “F-7”.
So far as equitable interests were concerned, issues emerged about aspects of a family trust. (business omitted) was trustee of the Ms Fadden Family Trust (“the Trust”), the creation date of which was not specified in the relevant instrument.[7] (business omitted) executed the trust deed on 26 June 2007. There being no better or different evidence about the date of the creation of the trust, I am willing to proceed on the basis that the date on which the trustee executed the trust deed was the likely date on which the trust commenced, the deed being otherwise silent on point. At all events, financial accounts of the trustee went into evidence in relation to the financial year ended 30 June 2013 and in relation to the financial year ended 30 June 2014. For the 2014 financial year, the net profit of the trustee ((business omitted)) from ordinary activities before income tax was the modest sum of $3,114.00.[8]
[7] Affidavit of Ms Fadden sworn 16 June 2015 at exhibit “F-8”.
[8] Affidavit of Ms Fadden sworn 16 June 2015 at exhibit “F-21”.
No formal valuation of the business of (business omitted) was given in evidence.
Among the documents exhibited to affidavits by the husband was a statement of account from the conveyancer addressed to the husband in relation to what appeared to be the sale of Property W.[9] In that statement of account the conveyancer reported that the sale proceeds due at settlement was $240,376.87 of which $188,247.75 was due to the mortgagee and after other sums were paid on account of rates and the conveyancer’s fee, the sum of $51,005.69 was to be paid to the husband.
[9] Affidavit of Mr Noakes affirmed 21 April 2015 at exhibit “X”.
As a matter of common conveyancing practice, the registered proprietor is the person to whom settlement funds are normally paid, subject to any specific direction to the contrary by the registered proprietor. As the conveyancer’s note indicated that the payment of a significant sum (over $51,000.00) was to go to the husband rather than to the husband and the wife jointly, I am willing to infer that the husband was properly entitled to those proceeds and that he was solely so entitled. In other words, I am willing to infer from the fact that the conveyancer remitted funds to “Noakes” rather than to “Noakes and Fadden” that the husband, as the sole person entitled to those funds, was the registered proprietor of Property W.
So far as the Property S property was concerned, the husband recognised in his affidavit affirmed 16 November 2014 that the wife’s mother Ms H (that is to say his mother-in-law) owned the Property S property. The wife’s affidavit material was replete with references to the wife’s mother being the owner of the Property S property. Again, no certificate of title was put in evidence concerning the Property S property. However, I am prepared to proceed on the basis that the husband’s mother-in-law was the registered proprietor of that parcel of land.
Accordingly, no legal interest could be asserted by either the husband or the wife in this proceeding in relation of that parcel of land. Equally, neither party could assert an equitable interest in the Property S property as that property was not part of the property that fell for division in this litigation.
The parties had a legal or equitable interest in other property relevant to this litigation. Some of it was valuable while much of it was of little value.
The husband’s affidavit material contained reference to a factory at Property G. It seems that factory had been vacated. The evidence on point was extremely scant. On balance, in my view the factory at Property G was not real property in which the husband or the wife had a legal or equitable interest appropriate for division under s.79 Act. As a result, I have not taken it into account for the purposes of this litigation.
Another issue in this case was the apportionment of an amount owing under two bank accounts namely –
a)business cheque account number (omitted); and
b)(omitted) Bank business credit card account number (omitted).
The wife’s interest in the trustee of the Trust, (business omitted), was a matter that fell for determination in this case. She was a beneficiary under the Trust, appointor under that trust and a director of the trustee, (business omitted).
The husband asserted that the wife’s discovery of documentation in relation to the Trust was defective. That may be the case. It is my task to determine this litigation having regard to the material properly admitted into evidence. But if in the course of that determination it is apparent that one party has been obfuscating in relation to discovery I have power to address that in the final orders I make in this case.
What constitutes the legal and equitable interests in this case?
Having recited the major assets in issue in this case as well as the ownership of the parcels of land, it is as well to record them below.
The most significant asset of value was the sum held by Bardo.
Assets of lesser value
In Table K of his case outline the husband set out an array of assets, the identity and value of which was in issue. Proof of ownership of the particular item, proof of the value of the particular item and proof of the person in whose possession the item remained was extremely poor. As a result of poor proofs about those matters, I was left in a position where I could not be satisfied about the existence of certain assets, about the value of certain assets or about the person in whose possession the particular asset was. In relation to certain assets on Table K, the evidence was scattered among a large number of affidavits in this case so the task of even locating the evidence about any particular asset was a formidable one. Be that as it may, I have done my best to track down the evidence about assets of seemingly absurdly small values (an outdoor heater estimated to be valued at $80.00 or a print of Leonardo da Vinci’s masterpiece “Mona Lisa” said to be valued at $10.00, for example) and then to determine whether the evidence supported the sum contended for.
A degree of disproportion existed in my being asked to make determinations about assets valued at absurdly small amounts. It is one thing for litigants, even unrepresented litigants, to come to court seeking a judicial determination of disputes they are unable to resolve. It is something altogether different for a litigant to require or even expect a federal judge of the Court that deals in approximately 100,000 cases each year to make determinations about an asset valued at $10.00 or $80.00 or even $1,000.00. The pressure on this Court to operate in a high-volume atmosphere is exquisite. By and large, this Court dispatches its business highly efficiently and supremely cost effectively. The public interest is well served by that approach and by that effort by this Court’s judges. But the public would be entitled to complain if it knew that the public purse was being consumed by a Commonwealth funded judge being required by litigants to make determinations about assets of ridiculously small amounts. The time spent in that activity could be better spent in hearing in determining other cases. Put differently, the time of the court is a publicly funded resource that must be used efficiently, according to the High Court decision in AON Risk Services Australia Ltd v Australian National University.[10]
[10] (2009) 239 CLR 175.
Here, no expert valuation evidence was adduced about the value of the assets. When the parties stated a value about any particular asset, that “value” was little more than that party’s estimation of the asset’s worth. The position did not alter in circumstances where, for example, one of the parties provided a receipt for the purchase of a particular item. The purchase price paid by that party reflected the purchase price. It did not reflect the written-down value of the asset nor even whether the asset had any value at all.
In the absence of evidence in the nature of an expert valuation about the value of items in Table K of the husband’s case outline, I was unable to place any meaningful value against any of the assets there listed. For example, one item listed was a (omitted) vehicle to which the wife ascribed a value of $15,000.00 and the husband ascribed a value of $3,000.00. The husband asserted that his valuation of $3,000.00 was supported by items advertised on Internet sites. I was unable to accept either assertion of value without evidence from a motor vehicle valuer or of a person whose occupation was such that he or she was able to give evidence as an expert rather than as any other member of the public, in accordance with principles set down by the High Court of Australia in Dasreef Pty Ltd v Hawchar.[11]
[11] [2011] HCA 21.
In respect of some assets listed in Table K, the value ascribed to them by one party or another was disputed – not on the basis of the valuation, but rather on the basis that the asset was not a matrimonial asset. An example of that was the ride-on mower. The wife asserted that the item was valued at $1,200.00. The husband stated that the item was worthless when it was received as a gift because it was broken. The husband disputed it was a matrimonial asset. In order to determine the question of the value of the ride-on mower, evidence of its value or lack of value should have been given. None was. In order to determine whether the ride-on mower was a matrimonial asset, as opposed to a gift, evidence of its status as a gift should have been given. Ordinarily, that consisted of evidence of an intention to transfer the property, acts such as physical delivery which gave effect to that intention and evidence of there being no obligation on the part of the person giving the gift to make the transfer and no obligation for the return of the gift. The law on the subject was emphatically pronounced in the decision of the Full Court of the Federal Court of Australia in Leary v Federal Commissioner of Taxation.[12]
[12] (1980) 32 ALR 221.
In another instance, the wife attributed a value of $2,000.00 to a collection of bricks and pavers. The husband asserted that they were valued at $400 rather than $2,000.00. He claimed he purchased the bricks and pavers then spent three days in labour stacking them from pallets. If the bricks and pavers were purchased so as to be used in works associated with an improvement to the former matrimonial home, to my mind it would not matter whether the husband or the wife expended the money as the bricks and pavers were intended to be incorporated into the improvement of the former matrimonial home. But the bricks and pavers were not incorporated into improvements on the former matrimonial home. Nor was there any evidence of any arrangement between the husband and the wife that the husband would be compensated for the days he spent unloading the bricks and pavers from pallets, still less was a rate for his labour agreed or specified.
With one exception, each and every item under Table K in the husband’s case outline was disputed as to value or as to whether it was a matrimonial item. The item not disputed was an amount of $500 for the husband’s clothing, accessories or personal effects. That figure was unsubstantiated. It more closely resembled an ambit claim. I was not persuaded that it was properly due.
Accordingly, I reject all items under Table K on the husband’s case outline for one or more of the following reasons –
a)none was proved as to value;
b)none was proved as to details of acquisition, especially date, amount, source of funds or whether the item was in fact and law a matrimonial asset or a gift;
c)in any event, the task of ruling on the amount claimed is an unwarranted use of court time; and
d)it is wasteful of public funds to require a federal judge to do so.
Liabilities
Next, it fell to me to identify the liabilities and to ascertain whether they were joint liabilities are otherwise. Joint liabilities would ordinarily be borne equally by the parties. On the other hand, liabilities that were not joint would ordinarily be borne solely by the party incurring the liability.
As with proofs concerning the assets in this case, proofs concerning liabilities were similarly imprecise. That said, in the passages below I have done my best to list the whole of the liabilities each party said must be taken into account in this case.
As with the items enumerated in Table K of the husband’s case outline, the items set out in Table L of the husband’s case outline were similarly challenging to unravel. The amounts in Table L were larger and bore more meaningfully on the financial adjustment to be made in this case. It is necessary to take all 16 items in turn.
Sum allegedly due to Ms H
The husband disputed that the sum of $60,000.00 was owing to his mother-in-law, Ms H. He asserted that the sum was repaid upon the refinancing of the former matrimonial home.
To better understand the narrative in respect of this item, it was necessary to go to the wife’s affidavit material. At the commencement of the trial of this proceeding, upon an order for witnesses out having been made, Ms H left the hearing of the Court, as it seemed she was to be a witness. Neither party ended up calling her to give evidence. Ms H was the best witness to have given evidence of money owing to her. She was not called to give information about her status as a creditor. That was another unsatisfactory consequence in this case of the husband and wife being unrepresented.
In her affidavit sworn 27 January 2016, the wife stated at paragraph 55 that the husband acknowledged the debt of $60,000.00 owing by the husband to Ms H because the husband so informed her Honour Judge Stewart of that acknowledgment, so the wife said, at a hearing conducted before her Honour on 29 July 2015.
The issue is not so much an acknowledgment of the debt, but rather, whether some arrangement or agreement existed pursuant to which Ms H forgave the debt in exchange for renovations to the former matrimonial home. To better understand the evidence on that point, it was necessary to scrutinise the evidence on point by the husband, the wife and Ms H.
The wife’s evidence on point has already been recorded. It did not provide any illumination on point.
The husband’s evidence on point amounted to a denial of any indebtedness.
While she was not called to give viva voce evidence, by agreement the evidence of Ms H in her affidavit sworn 21 May 2015 was admitted without challenge.
In that affidavit, Ms H swore that in May 2004 she inherited over $65,000.00. She swore that she invested her money into her daughter’s land at Property K to enable the wife to commence building a home. Ms H swore that soon after the husband and wife commenced their relationship, the husband told the wife and Ms H that the husband could not live at Property K and that the property should be sold and that the blended family (consisting of the wife, her children C and D, Ms H, the husband and the husband’s two children A and B) should acquire a property where they could all live. Ms H swore that the husband was always aware that Ms H had invested money in the Property K property and that he promised he would provide her with suitable self-contained living at “the farm” as the land at Property A came to be known.
Ms H swore that she supported the wife and husband by looking after the four children so that the wife and husband could work full-time.
Ms H further swore that the conditions at the farm were inhospitable and the shed she was required to occupy was uninhabitable. However, she persevered with that state of affairs for three years.
Ms H said her daughter’s company purchased Property S and that she and the owner of Property S entered into a residential tenancies agreement, her daughter (the wife) being in effective control as landlord.
Ms H’s affidavit appeared to have been prepared and filed by the wife at a time when the wife did not have legal representation. It contained an array of assertions that were not admissible or which were pejorative, non-probative or which were simply unhelpful. Ms H did not give evidence about the amount she “invested” in the Property K property. She did not provide any form of proof that the sum she “invested” was in fact applied towards the purchase of the Property K property. In a sense, it was understandable that an unrepresented litigant, doing her best as the wife did, might not cover all the evidentiary matters that fell to be addressed through evidence in this case. I make no criticism of the wife in that regard. However, where a gap in the evidence existed, as it did concerning the $60,000.00 allegedly invested by Ms H in an item of real estate and that gap was not filled by the time I heard the trial in this case, then I was left in a position that the point was not proved. No bank deposit of $60,000.00 was produced. No flow of funds was traced showing how $60,000.00 went from Ms H’s account to some other account referrable to the acquisition of an interest in land. That sum was no small amount to Ms H and yet not an email, letter or other document was produced to record the fact of the advance. In short, no evidence was given to support the assertion that Ms H paid $60,000.00 to assist her daughter’s acquisition of any interest in any parcel of land. By the same token, I was unable to be satisfied that the husband’s denial of liability was correct (although he bore no burden of proof in that regard) nor could I reach any conclusion that upon refinancing the former matrimonial home, the husband repaid the sum of $60,000.00.
On the state of the evidence presented, I was not persuaded on the balance of probabilities that Ms H in fact invested $60,000.00 or that such an amount needed to be repaid to her by the husband.
(omitted) Bank business overdraft
In paragraph 56 of her affidavit sworn 27 January 2016, the wife swore that as at that date the sum of $51,243.67 was owed to (omitted) (Australia) Pty Ltd (“(omitted)”), being a debt assigned to (omitted) by (omitted) Bank. A statement dated 25 January 2016 was exhibited to the wife’s affidavit[13] showing an opening balance indebtedness of $52,727.31 then monthly payments from May 2015 to 14 January 2016, each of mostly $200.00. In five of those months, interest was added to the unpaid balance with the consequence that over the period from May 2015 to January 2016, $3,801.00 had been paid in reduction of an opening balance of $52,727.31, yet despite those payments, the unpaid balance was only reduced to $51,243.67.
[13] Affidavit of Ms Fadden sworn 27 January 2016 at exhibit “F-5”.
In view of the state of the other evidence in this case, it seemed to me that the (omitted) statement as at January 2016 showing a current balance of the (omitted) debt at $51,243.67 was the best evidence of that debt at that date. Of course, the fact of the debt said nothing about how it was incurred nor who was properly responsible for the discharging of the debt.
The wife admitted making a collection of payments of relatively small amounts each month. I mean no disrespect in referring to those monthly payments in that way. It must be recognised, as I do, that the wife made those payments from her disposable income derived from a pension. It seemed at face value that she did her best to meet that debt from the little amount she had each month. Sadly, with interest being accumulated to the reducing balance of the debt, very little headway was gained in reducing the debt.
The real issue in relation to the (omitted) Bank liability was whether it was a debt incurred jointly by the husband and the wife prior to separation for which both are now responsible.
The notice of assignment of the debt from (omitted) Bank to (omitted) dated 27 April 2015 was addressed to the wife alone.[14] Ordinarily, for there to be a valid assignment of debt, all persons affected by the assignment (in the case of an assignment of debt that is usually all borrowers) must be given notice of the assignment. Here, only the wife was given such notice. That tended to show that she was the only borrower which in turn indicated that the debt to (omitted) Bank was hers alone. Of course, that is by no means the end of the matter as one party to a marriage may incur liability in his or her sole name yet the benefit of that liability so incurred might be shared jointly. Borrowings are typical of that. One party to the marriage may be the sole named borrower yet the funds borrowed are applied for such things as home improvements, a family holiday or educational expenses for their children. In that situation, while the loan may have been in one name only, both parties to the marriage benefited from the use of the funds so borrowed. In that situation, the courts treat the loan as one for which both parties to the marriage are responsible and one which both parties to the marriage are equally liable to discharge by payment.
[14] Affidavit of Ms Fadden sworn 16 June 2015 at exhibit “F-9”.
The question then became whether the (omitted) Bank loan, later assigned to (omitted), was used for joint purposes.
As with all items in dispute in this case, the evidence about the (omitted) Bank loan was confusingly advanced. I have done the best I can to attempt to untangle the very scrambled presentation of the relevant facts surrounding the (omitted) Bank indebtedness.
It seemed, and by that I mean I was required to piece together several strands of stand-alone items of evidence so as to weave together the facts of this indebtedness, that the (omitted) Bank debt was somehow relevant to the land at Property C. Again, in an attempt to piece together the narration, it seemed that the wife as sole director and shareholder of (business omitted) caused (business omitted) to purchase the land at Property C. It will be remembered that (business omitted) was the wife’s company in every sense. The (omitted) Bank loan appeared to have been used for purposes associated solely with (business omitted). In paragraph 11 of her affidavit sworn 16 June 2015, the wife acknowledged just that. In addition, elsewhere in her affidavit material in this case the wife swore that she kept the business entirely separate from the husband as she had little regard for his business acumen. The wife decided to sell the land at Property C and pay out the business overdraft. She swore that the business run by (business omitted) serviced the mortgage (inferentially, the mortgage secured by the land at Property C). She swore that by reason of her being the director of (business omitted) and guarantor of the loan to (business omitted) from (omitted) Bank, she was liable for the debt.
In the face of that statement, I am unable to see how it could be said that the (omitted) Bank liability, now a debt to (omitted), is anything but a debt owed solely by the wife. It was not a joint debt of the marriage. On the facts of this case, the wife kept her business entirely separate from the husband. At no stage was (business omitted) a joint economic endeavour between the husband and the wife. (business omitted) was the trustee of the Trust.
It may have been the case that the wife’s income from her business activities (more correctly, that the discretionary distributions were made by the trustee that she controlled from time to time for the beneficiaries under the Trust) was applied by the wife towards a joint expense of the marriage or towards a family-related pursuit. Next to no evidence was adduced on that point so I was unable to say and I am certainly unable to make a finding of fact on that issue on the balance of probabilities.
So far as the (omitted) Bank loan was concerned, it was not a joint debt. The wife remains liable for it in whole.
(omitted) Bank Account credit card
The wife swore that an amount on an (omitted) Bank Account credit card was to be brought to account in this case. The amount in issue was $13,481.78. The husband said that debt was not a matrimonial debt which I took to mean that he did not benefit from it nor was the money applied to a joint or family-based pursuit.
The wife exhibited a letter dated 24 December 2015 from (omitted) Bank addressed to (business omitted) in relation to (omitted) Bank account number (omitted).[15] The balance outstanding at that date was $13,481.78. In respect of that account, the wife spoke of it differently than the way she spoke of the (omitted) Frequent Flyer credit card account. In relation to the (omitted) Frequent Flyer credit card, the wife stated that it was used as a joint card by her and the husband. She did not make the same observation in relation to the (omitted) Bank Account credit card. That indicated to me that the wife regarded the (omitted) Bank Account credit card, standing in name of (business omitted), as a debt solely owing by (business omitted). That much accorded with a plain reading of the account information as recorded in the 25 December 2015 correspondence.
[15] Affidavit of Ms Fadden sworn 27 January 2016 at exhibit “F-6”.
The wife gave evidence that funds drawn down on the (omitted) Bank Credit Card were used to further (business omitted)’s overseas transactions. Those funds were used solely to enhance the business of (business omitted). In those circumstances, there being no meaningful evidence pointing to a joint purpose in the use of those funds, the only conclusion open was that the (omitted) Bank Account debt was a (business omitted) debt and not a joint debt.
(omitted) Frequent Flyer credit card
The parties agreed that the liability for $5,961.67 to (omitted) Bank in relation to account number (omitted) was joint. In those circumstances, both the husband and wife are liable to discharge that debt.
(omitted) Accountants
The husband disputed that a liability for the sum of $6,380.00 to a firm of accountants called (omitted) Accountant (“(omitted)”) was a debt for which he was jointly liable. The affidavit of the wife sworn 16 June 2015 addressed that debt at paragraph 23. She swore that (omitted) invoiced (business omitted) to finalise tax returns for the Trust. It will be recalled that (business omitted) was trustee of the Trust. The husband had no connection with that Trust, except that at the time he was married to one of the beneficiaries of the trust and that his wife was the controlling mind behind the trustee. As at October 2015, the account from (omitted) stood over 120 days in arrears. Whether this liability is a bad debt or write off remains to be seen but the debt was not one for which the husband was jointly liable. (business omitted) was solely liable for it.
Bardo
The husband disputed any responsibility for the sum of $14,946.70 to Bardo. His dispute was understandable. The fee rendered by that firm in that amount was for the wife’s family law litigation – in other words, this case. The wife exhibited several documents from that firm to her affidavit sworn 16 June 2015 one of which was a printout from that firms trust ledger.[16] Unmistakably, the wife was the firm’s client. Its invoice is payable by the wife. The husband is not responsible in any way or any payment of the fees of that firm. Those fees are entirely the wife’s sole responsibility.
[16] Affidavit of Ms Fadden sworn 16 June 2015 at exhibits “F-16” and “F-17”.
Esanda business car finance
This item involved the sum of $24,114.80. It related to a motor vehicle lease. (omitted) (a business of (omitted) Bank ) wrote to the wife by letter dated 24 December 2014 recording its intention to take possession of the goods described in contract (omitted).[17] The wife swore that the goods consisted of a Holden (omitted) motor vehicle leased in the company name. The repossession letter from the financier did not describe the vehicle. However, the wife was the named addressee of the repossession notice. In hand, some unidentified person wrote “payout 11-2-2015 valid 22-2-2015 $25,799.60”.[18] That approximated loosely with the sum in issue between the parties, $24,114.80.
[17] Affidavit of Ms Fadden sworn 16 June 2015 at exhibit “F-13”.
[18] Ibid.
The wife swore that she struggled to make payments on the car and that its resale or trade-in value was much lower than was the outstanding sum due under the car finance. That is a common experience in motor vehicle leases. But that is not the point. The issue is whether the husband is in any way responsible for the car lease liability. In my view he is not.
True, the lease itself was not put in evidence nor was the payment history of that loan. However, having regard to other evidence in this case about the way the wife kept her (business omitted) business interests separate from the husband, it is more probable than not that she likewise kept the company asset, here the car, separate from the husband. The fact that the husband may have used the car periodically, as a driver or passenger, did not convert an asset of the company into a joint asset of the husband and wife.
In relation to this sum of $24,114.80, in my view the husband is not liable in any way for the discharge of the car finance liability.
(omitted) MasterCard
The husband and wife disputed the amount in issue relating to the (omitted) MasterCard. In her affidavit sworn 16 June 2015, the wife asserted that the amount due was $17,823.01. In her affidavit sworn 27 January 2016, the wife swore that the amount due was $18,208.92 and the husband asserted that at the date of separation, yet a third amount was relevant, $16,541.34, and that he acknowledged that amount as being due, inferentially as a joint liability, up to the date of separation (being 15 May 2014).
There was no evidence of the amount of the debt as at 15 May 2014.
A letter from (omitted) Bank dated 25 December 2015 was the closest in point of time between the state of the debt and the date of separation.[19] In the absence of any other, better evidence I have proceeded on the basis of the (omitted) Bank debt was likely to have been slightly less than that amount as at 15 May 2014 but what precise sum cannot be said. I have therefore used the amount of $17,823.01.
[19] Affidavit of Ms Fadden sworn 27 January 2016 at exhibit “F-11”.
It seemed to me to be appropriate to treat the sum of $17,823.01 as a liability for which the husband and wife were jointly responsible. That was the thrust of the husband’s acknowledgment.
(omitted) Bank Account joint account
Both parties agreed that the sum of $1,006.41 was a joint liability.
Amount due to ASIC
The wife put in issue the sum of $629.00 being the amount paid or payable to ASIC. The husband disputed any liability for the amount. The invoice from ASIC was dated 24 September 2015 and addressed to (business omitted), c/o (omitted).[20] That sum had no connection to the husband as the amount related to a fee in respect of (business omitted), a company in which the husband had no interest.
[20] Affidavit of Ms Fadden sworn 27 January 2016 at exhibit “F-13”.
The husband is not liable for any part of that amount. The wife is solely responsible for the whole of that amount in her capacity as the directing mind of (business omitted).
(omitted) Bank Account credit card
The husband asserted that the sum of $9,017.04 was to be included in the liabilities to be considered in this case. The relevant account was in the husband’s sole name and a collection of statements relevant to account (omitted) were exhibited to the husband’s affidavit affirmed 21 April 2015.[21] The statement closest in time to the date of separation was 15 May 2014. It recorded the opening balance of $9,128.53 of which $142.99 was overdue and no available credit was shown. No precise sum due was shown as at 15 May 2014. In the absence of evidence to that effect, the best evidence of the extent of the liability in relation that account was $9,142.99.
[21] Affidavit of Mr Noakes affirmed 21 April 2015 at exhibit “C”.
The account was in the husband’s name. Notwithstanding that single fact (as with accounts in the wife’s name) the question was whether the funds of that credit facility were used in the payment for a purchase of assets or things for the benefit of the husband and the wife jointly or for the advancement of the family. The husband gave no direct evidence on that point. A closer examination of the entries on the back of each statement did not advance the enquiry very much further. Among the pages of amounts from that account were (omitted), (omitted), (omitted), (business omitted) ($6,000.00), (omitted), (omitted), (omitted), (omitted), (omitted)’s and (omitted). The suppliers (whether of goods or services) listed above are well-known. Some are for goods or services of a commercial nature whereas others are for goods or services of a domestic nature. That is true except for the payment of $6,000.00 to (business omitted).
The payment to (business omitted) of $6,000.00 was not the subject of any narrative by the husband. Yet it appeared to have been the payment to advance the interests of (business omitted) in some way. It is highly unlikely that any such payment was made without the knowledge or approval of the wife. Further, as the husband was the sole account holder of that particular account, an inference may be drawn that the payment of $6,000.00 to (business omitted) was made with his permission upon her instructions.
On the balance of probabilities, in my view the expenditures totalling $9,017.04 on the (omitted) Bank low rate credit card in the husband’s name was joint with the consequence that the husband and wife are equally responsible for the payment of them. The wife must contribute half the total liability of that account.
(omitted) Bank variable rate loan
The husband asserted that a liability in the amount of $37,634.86 had to be brought to account in this case.
The husband affirmed in paragraph 6 of his affidavit dated 21 April 2015 that he obtained a loan, recorded as (omitted) Bank account number (omitted), for the purposes of jointly purchasing a (omitted vehicle) as well as building materials at the Property A property and also for reducing sums owing under other credit cards. As with most aspects of this case, little to no direct evidence was adduced about that component of the case. The relevant statements were exhibited to the husband’s affidavit affirmed 21 April 2015.[22] The statements themselves gave no description of the things against which the payments were made. The first entry on the first statement was dated 17 September 2012. It showed a loan draw-down of $40,000.00 on that day. On 15 May 2014, being the date of separation, the outstanding debit balance on that account was $33,219.09.
[22] Affidavit of Mr Noakes affirmed 21 April 2015 at exhibit “D”.
Whereas the husband’s assertion of the debit balance on that account was $37,634.86, that amount closely corresponded to an outstanding debit balance at a different date (8 April 2013) when the balance was $37,655.22. Neither the date nor the amount there stated was correct. As at the date of separation, the debit balance was, and I so find, $33,219.09.
The next question was whether the funds were applied in payment of joint sums due. The husband said part of the sum due was used to buy a (vehicle omitted) and another part was used to pay for building materials. Those assertions were not proved. The husband estimated the (vehicle omitted) to have been valued at $3,000.00, the wife estimated $15,000.00. No evidence was adduced that the (vehicle omitted) was purchased from funds in the (omitted) Bank variable loan account nor was evidence adduced of the amount exactly paid. Aside from that, no evidence was led about the way the expenditure on the purchase of the (vehicle omitted) was a joint expenditure. Similarly, no evidence was led about the building material expenses said to have been paid from funds drawn down on the (omitted) variable rate loan, whether as to items, quantity or cost. In the end, there were no meaningful materials before me by which I was able to assess whether any, and if so how much, of the sum of $33,219.09 drawn down on the (omitted) Bank variable rate loan was a liability for which both the husband and the wife were jointly responsible.
In that eventuality, the evidence led by the husband in relation to that item was inadequate to demonstrate on the balance of probabilities that all or any of the sum of $33,219.90 had to be met by the wife. I find that the whole of the debit balance in that account up to the date of separation was the husband’s responsibility.
(omitted) MasterCard
The husband asserted that the wife was jointly liable for payment of the (omitted) MasterCard. The amount said to have been due fluctuated. In his affidavit affirmed 21 April 2015, the husband stated that the total due to (omitted) was $3,969.39 whereas in his case outline the husband said the amount was $4,719.13.
The wife did not acknowledge liability for any outstanding amount against (omitted) account number (omitted). As at 6 May 2014, that being the statement date closest to the date of separation (15 May 2014), the debit balance of the (omitted) account stood at $3,045.53, not the other amounts mentioned.[23] For the purpose of a consideration of the amount said to be owing to (omitted), the figure of $3,045.53 has been selected.
[23] Affidavit of Mr Noakes affirmed 21 April 2015 at exhibit “E”.
As to the nature of the payments made against that account, standing in the sole name of the husband, they include such things as a payment of $9,000.00 to (business omitted) on 6 February 2013. They also included payments to (omitted), (omitted), a restaurant, a liquor vendor, a butcher and (omitted). As with other accounts in this case, details were not given of the precise nature of the goods or services for which payment was made. But the identity of the goods or services provider told some of the story. It seems likely that the expenses paid by using funds from the (omitted) MasterCard were a combination of domestic and business expenses including a payment to (business omitted) of $9,000.00 on 6 February 2013.
To my mind, that account was used to meet joint liabilities of the marriage. An adjustment must therefore be made so that the wife is responsible for half of that liability as at separation date.
(omitted) MasterCard
The husband asserted that a further credit card liability in his name for the sum of $3,253.71 should be partly paid by the wife.
The outstanding balance on the (omitted) MasterCard account number (omitted) on the date nearest to separation was $3,253.71 as recorded by the husband in his case outline. As with other documents in issue in this case, the real issue in relation to this account was its characterisation as a joint liability. In turn, that depended on whether the funds from that account were used for joint purposes as between the husband and the wife.
As with other documents in issue in this case, next to no evidence was led to explain how sums making up the outstanding balance on that account had been applied. Some insight was given by the statement dated 28 August 2012 to 27 September 2012.[24] On two occasions in that period bedding was purchased, valued at $569.00 and $2,804.00. Naturally, the statement did not reveal any further details about the bedding purchased nor did any other evidence in the case. On 1 June 2013, computers (plural) were purchased for the sum of $545.00 according to another statement. Between the date on which that account was created (August 2012) and the date of separation, no other transactions were recorded in that account.
[24] Affidavit of Mr Noakes affirmed 21 April 2015 at exhibit “F”.
It seems likely that two purchases of bedding and one purchase of computers were purchases that benefited persons beyond the husband. In those circumstances, I am persuaded on the balance of probabilities that funds in the (omitted) MasterCard were applied for joint purposes and therefore the outstanding balance was a liability for which each of the husband and wife was jointly liable.
(omitted) MasterCard
The husband asserted that an adjustment had to be made in respect of the sum of $3,479.91. That sum related to payments which the wife was jointly liable. This was the (omitted) Bank account number (omitted) in the husband’s sole name. The account statements spanned the period between 3 May 2013 and 27 March 2015.[25] No statement was put in evidence as at the date of separation. The nearest statement date approximate to final separation was 27 March 2015. As at that date, the amount of available credit in that account was $4,007.41. That figure did not align with the figure specified in the husband’s case outline where he stated that the relevant amount to be adjusted was $3,479.91.
[25] Affidavit of Mr Noakes affirmed 21 April 2015 at exhibit “G”.
In view of the fact that the husband pressed for an adjustment to be made on the lower of those two figures, I have proceeded on the basis that the figure to be adjusted is $3,479.91 rather than $4,007.41.
As with other accounts, the payments from that account should be adjusted in the manner argued by the husband if those payments were made to meet liabilities jointly incurred or to meet liabilities paid for joint purposes. On an examination of various debit entries against that account, it is readily apparent that joint liabilities were paid. Amounts were also paid in satisfaction of liabilities incurred for joint purposes. Examples included payments to (omitted), (omitted), (omitted), (omitted), (omitted) to name a few. Those retailers are sufficiently well-known that the products and the purpose of products sold by them are also well-known. In the examples quoted above, a mix of personal and business purposes is set out. While it is impossible to tell who actually consumed the relevant products, it is likely that the husband consumed some while the wife and the children may well have consumed others. In those circumstances, it seemed to me that on the balance of probabilities that the amounts drawn down on this account were for joint purposes for which both the wife and husband should share equally in meeting that liability.
(omitted) Bank visa credit card
The husband sought orders adjusting responsibility for the sum of $1,007.59 in relation to an (omitted) Visa credit card number (omitted).[26] That account was in the husband’s sole name.
[26] Affidavit of Mr Noakes affirmed 21 April 2015 at exhibit “H”.
That account was used to pay amounts to (business omitted) ($1,000.00). Small payments were made against the outstanding balance, amounts such as $25.00 or $60.00.
The main application of funds from that account was (business omitted). Any payment of an amount that benefited the husband was impossible to tell from the statements. No other evidence was adduced about that account.
In those circumstances, on the balance of probabilities the funds from that account were used to inject funds into (business omitted). No other evidence was adduced on point. The sum claimed was therefore properly owed and payable by the wife as the controlling mind of (business omitted) and not jointly with the husband.
Summary of responsibility for liabilities
Working through the 16 items in table L of the husband’s case outline, I have determined the items below must be adjusted in the manner as set out below –
a)no probative evidence was given in relation to the “Ms H loan” of $60,000.00 therefore no adjustment is required and the husband is not required to pay it;
b)as to the sum of $51,243.67 described as the (omitted) overdraft, that amount is solely the wife’s responsibility, no adjustment is required in respect of it and the husband is not required to pay any amount of it;
c)as to the (omitted) Bank Account credit card amount of $13,481.00, that was a (business omitted) liability not a joint liability so the wife is responsible for it and no adjustment in respect of it is required;
d)as to the (omitted) Frequent Flyer credit card for $5,961.67, both the wife and the husband are jointly liable for that amount;
e)the wife is solely responsible for the debt owing to (omitted) Accountants in the sum of $6,380.00;
f)the wife is solely responsible for Bardo’s legal fees of $14,946.70;
g)as to the (omitted) business car finance of $24,114.80, no adjustment is required as that amount was solely the wife’s responsibility;
h)the (omitted) MasterCard in the sum of $17,823.01 was a joint responsibility to be apportioned as to half to the wife and half to the husband;
i)the (omitted) Bank Account debt for $1,006.41 was an agreed joint responsibility;
j)the ASIC amount of $629.00 was solely the wife’s responsibility and no adjustment was required in respect of it;
k)the (omitted) Bank Account credit card balance of $9,017.04 was a joint responsibility for which adjustment must be made;
l)the (omitted) Bank variable rate loan of $33,219.09 need not be adjusted as it is solely the husband’s responsibility;
m)the (omitted) MasterCard amount of $3,045.53 was a joint responsibility so that adjustment is needed;
n)the (omitted) MasterCard amount of $3,253.71 was a joint responsibility, the liability for which must be adjusted;
o)the (omitted) MasterCard liability of $3,479.91 was a joint responsibility to be adjusted; and
p)the (omitted) Visa credit card amount of $1,007.59 related to a (business omitted) payment for which the wife was solely responsible and the husband is not responsible. Adjustment must be made in favour of the husband.
In respect of the amounts which I have found the wife and husband jointly responsible, arithmetically my conclusions amount to the following –
a)(omitted) Frequent Flyer credit card ($5,961.67) – if that sum has not been paid, both the husband and the wife must pay half and if the sum has been paid by the husband, the wife must pay the husband half the value;
b)(omitted) MasterCard ($17,823.01) – if that sum has not been paid, both the husband and the wife must pay half and if the sum has been paid by the husband, the wife must pay the husband half the value;
c)(omitted) Bank Account ($1,006.41) - if that sum has not been paid, both the husband and the wife must pay half and if the sum has been paid by the husband, the wife must pay the husband half the value;
d)(omitted) Bank Account credit card ($9,017.04) - if that sum has not been paid, both the husband and the wife must pay half and if the sum has been paid by the husband, the wife must pay the husband half the value;
e)(omitted) MasterCard ($3,045.53) – if that sum has not been paid, both the husband and the wife must pay half and if the sum has been paid by the husband, the wife must pay the husband half the value;
f)(omitted) MasterCard ($3,253.71) - if that sum has not been paid, both the husband and the wife must pay half and if the sum has been paid by the husband, the wife must pay the husband half the value; and
g)(omitted) MasterCard ($3,479.91) – if that sum has not been paid, both the husband and the wife must pay half and if the sum has been paid by the husband, the wife must pay the husband half the value.
Sum held in trust by Bardo
The husband asserted that as at 1 January 2016, Bardo held the sum of $119,815.94 in trust. That amount was said to have been the net proceeds of the sale of the former matrimonial home and of the land at Property C.
One of my first tasks is ascertaining precisely how much Bardo holds in trust.
The best evidence available about funds held by Bardo was a controlled matter ledger dated 10 June 2015 addressed to the wife, being part of exhibit “F-15” to the wife’s affidavit sworn 16 June 2015. According to that document, on 7 April 2015 the sum of $118,536.32 was shown as having been transferred from Bardo’s trust account into an interest-bearing controlled account. By 2 June 2015, the amount had been transferred to an interest-bearing account with (omitted) Bank and the balance stood at $118,842.60.
As at January 2016, the balance in the interest-bearing account with (omitted) Bank was $119,815.94, being the same amount as the husband set out in this case outline.
In this case I have proceeded on the basis that the undisputed amount in the interest-bearing (omitted) Bank account controlled by Bardo was $118,842.60. In other words, that is the source of funds that is to be divided in this case.
A different question arises about the composition of those funds. In other words, from the sale of which asset or assets was the aggregated sum derived? The husband asserted it was made up in part of the net proceeds of the sale of the former matrimonial home and in part of the proceeds of sale of the land at Property C.
Both parties had an interest in adducing evidence on that issue. The evidence about how the sum held by or under the control of Bardo was made up was very scant. I was unable to discern how much of that amount was derived from the sale of which parcel of land. In so far as it was derived from the sale of the former matrimonial home, no detail was given as to how much was made up in that manner. In so far as the amount held by Bardo was made up of the proceeds of the sale of Property C, that land was previously owned by (business omitted), an entity in which the husband had no interest. Precisely how much of the sum held by Bardo was made up of the proceeds of the sale of Property C was also not given in evidence.
That significant gap in the evidence, as with other matters in respect of which the evidence was poor, highlighted yet again how unwise the parties were in ignoring the caution I gave them immediately after appearances were announced and which is recorded in paragraph 20 above.
The trust ledger exhibited by the wife was silent on point.
It may have been possible to deduce the likely amounts from other items of evidence, for example, had the sale contract been produced or better, the settlement statements for the settlements of the sale of the former matrimonial home and Property C in conveyancing files. None were produced. It is less than scientific to attribute half of the amount held by Bardo to one property and the other half to the other property in the absence of any indication, even an indicative valuation, of the net sale price of each parcel of land. However, no evidence was led that pointed to any other method. I am less than comfortable to proceed on that basis but in view of the need for finality in this litigation, in view of the evidence on point being woefully deficient and in view of there being no other or better method, I have no realistic option of doing otherwise.
The proceeds of sale of Property C were not, strictly speaking, relevant as Property C was owned by (business omitted) and not by the husband or wife. However, (business omitted) was at all relevant times owned and controlled by the wife and (business omitted) was trustee of the Trust in respect of which the wife was a beneficiary. In many respects, at law the wife had an indirect interest in (business omitted)’s entitlements to be paid from the sum held in Bardo’s interest-bearing account. Yet at a practical level, as the controlling mind of (business omitted), the wife had a very direct and very real interest in (business omitted)’s entitlement to be paid from the sum held by Bardo in its interest-bearing account.
In Stanford the High Court of Australia instructed a first instance judge such as me to identify the legal and equitable interests of the parties. What may be the practical consequence of a proprietary interest in land being held in a certain manner (or in the proceeds of sale of land) is not germane to that enquiry. To say that the wife was the natural person behind (business omitted), so that (business omitted)’s interest in the funds under Bardo’s control were in reality the wife’s, is to ignore the very reason why the wife’s business interests were arranged by the imposition of a corporate trustee and by the establishment of a discretionary trust.
But the Act confers power upon a judge exercising powers under the Act especially in relation to trusts. Authority at the highest level of the High Court of Australia in Kennon v Spry[27] held that it is proper to treat the property of a trust as property of the parties to the marriage, such property being capable of division. In Stephens v Stephens,[28] the Full Court of the Family Court of Australia held that an order may be made that enables a party to the marriage who is in control of the trust (here, the wife) to satisfy his or her personal liability to the other party to the marriage (here, the husband). In view of those authorities, each of which binds me, the whole of the funds held by Bardo must be divided. So far as the percentages are concerned in any such division, I have addressed that below against the statutory regime prescribed by the Act.
[27] [2008] HCA 56.
[28] [2009] FamCAFC 240.
Section 79(4) considerations
In assessing the orders that are appropriate to make in the division of property, I am required by s.79(4) of the Act to take into account a very significant array of issues, not only those prescribed by that section but also issues incorporated by reference under s.75(2) of the Act. In making the orders that have been set out in the commencement of these reasons, I have taken into account each of the seven matters prescribed by s.79(4) and each of the 19 matters prescribed by s.75(2) of the Act.
So far as the direct and indirect financial contributions of the husband and wife were concerned relevant to s.79(4)(a) of the Act, each directly applied funds they had prior to meeting one another from land they each separately owned towards land purchases. They did not give particularly useful evidence about precisely how much that was nor when each provided those contributions.
Each made indirect contributions by providing work, labour and creativity towards the improvement of various parcels of land. It is not possible to put a percentage amount against the extent of the indirect contribution of each as neither the husband nor the wife descended into the detail to say what each did on what day or for how long or how or why any such contribution mattered. Plus, a high degree of dispute existed between them about precisely what each did by way of indirect contributions. For example, the husband asserted that throughout the marriage he undertook extensive renovations to the homes in which the family lived from time to time. The wife challenged the extent of, and in some cases the fact of, that work having been done at all. Photographs were put into evidence but they were of little help in describing the date or the state of works they depicted. Naturally, renovation work involved demolition, as the photographs showed, but photographs did not show reinstatement work nor work following the demolition so I was unable to gain any real appreciation of the final product of the work actually done. Nor could I meaningfully assess how, for example, the acquisition of pavers was relevant. If those pavers were incorporated into works, the evidence on point was extremely scant.
So far as direct or indirect non-financial contributions were concerned for the purposes of s.79(4)(b) of the Act, likewise, the evidence was extremely imprecise. I accept that both the husband and the wife made direct and indirect non-financial contributions. But their evidence did not enable me to conclude whose contribution was greater nor did their evidence enable me to say, as a proportion of the overall non-financial contribution, how much that party’s non-financial contribution was, in fact.
So far as the matters canvassed in s.79(4)(c) of the Act were concerned, the contribution by the husband and the wife to the welfare of the family was favourable. Both worked hard and each was committed to the family unit, at least for a time and until it became apparent that the husband and wife were in marital difficulties, each seemed to be committed to advancing the welfare of the family, even to the extent of inviting Ms H to live with them. I accept that Ms H’s circumstances on the farm were not ideal. However, the evidence revealed that for a time anyway, the husband and wife were keen to make their marriage work and they contributed to the welfare of their blended family.
For the purposes of s.79(4)(d) of the Act, the orders I have made do not bear upon each party’s earning capacity.
So far as s.79(4)(e) of the Act was concerned, it introduced the elements of s.75(2), so far as any may have been relevant. One of the elements of s.75(2) that was relevant, s.75(ha), concerned the effect of my orders on a creditor’s ability to recover its debt. It may be fairly said that the husband and the wife lived beyond their means in the lead up to their separation. They lived from borrowed funds. As was mentioned above, the number of credit cards that funded their lifestyle was remarkable. Once those credit card liabilities are addressed, there will be significantly less by way of funds available for the husband and the wife. But those creditors must be paid.
Sections 79(4)(f) and 79(4)(g) of the Act were not relevant.
Based on the matters stated immediately above in relation to the issues for consideration under s.79(4) of the Act, it seemed to me that –
a)both financially contributed directly and indirectly, although the precise amount of any such contribution could not be accurately stated;
b)both contributed in a non-financial manner, directly and indirectly;
c)at least in the early days of their marriage, both contributed to the welfare of the family; and
d)creditors need to be paid.
Dividing the assets
In my view, the starting point was the sum held under Bardo’s control.
In view of the incredible imprecision on the evidence in this case and the relatively equal contributions made for the purposes of s.79(4) of the Act, the question of how much goes to whom has been answered below.
Raw and unsubstantiated as the material was on point, it seemed to me that prior to the marriage, the property at Property K in the wife’s name was valued, in very rough terms, at around $470,000.00, the mortgage stood at about $270,000.00 and that the net equity in the wife’s favour was about $200,000.00.
The former matrimonial home at Property A was then purchased, the husband contributing $20,000.00, according to the very unsatisfactory state of the evidence.
The husband may (I repeat may as the evidence on point was extremely poor) have also contributed about $50,000.00 from the sale of his land at Property W.
Using the most generous of arithmetic, that meant that the wife contributed about $200,000.00 and the husband contributed at best $70,000.00. In proportionate terms, the wife contributed two thirds and the husband contributed about one third.
(business omitted) was essentially valueless.
The direct and indirect contributions of a non-financial nature during the marriage were essentially equal.
Put slightly differently, no evidence was led by which I could assess whether the proportions of those contributions were different and if so, by how much.
Accordingly, for the purposes of apportioning the sum under Bardo’s control, I order it to be disbursed as to two-thirds in favour of the wife and as to one-third in favour of the husband.
The creditors must be paid from the amounts ordered. The husband’s and wife’s proportionate liability for the payment of each creditor has been set out above under the heading “summary of responsibility for liabilities”. If they do not pay those creditors, they are at risk of being sued.
A final word
The above reasons have addressed only property issues. Parenting issues remain to be determined.
I certify that the preceding one hundred and forty-eight (148) paragraphs are a true copy of the reasons for judgment of Judge Wilson
Date: 6 December 2016
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