FEDERAL CIRCUIT COURT OF AUSTRALIA
| NORRIS & NORRIS | [2017] FCCA 2435 |
| Catchwords: FAMILY LAW – Property settlement proceeding – marriage of long duration – both parties worked during relationship – inheritance during early part of relationship – husband develops (omitted) disease – wife continues to work and provide for welfare of husband and family – unilateral sale of property and interim division of property by consent – just and equitable for adjustment of property interests – net asset pool to be determined as at date of trial – no justification for add backs to asset pool – equality as starting point? – determination of relevant sub-s 79(4) issues – agreed that sub-s 75(2) factors neutral – holistic evaluation of what orders are just and equitable in this case. |
| Legislation: Evidence Act 1975 (Cth), s.140 Family Law Act 1975 (Cth), ss.4, 75, 78, 79, 80, 81, 106A |
| Cases cited: Aleksovski & Aleksovski (1996) FLC ¶92-705 Text cited: Callaway, The Just and Equitable Ground (1977) |
| Applicant: | MS NORRIS |
| Respondent: | MR NORRIS (BY HIS LITIGATION GUARDIAN, MS L) |
| File Number: | MLC 9086 of 2016 |
| Judgment of: | Judge A Kelly |
| Hearing dates: | 10-11 April 2017 |
| Date of Last Submission: | 11 April 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 10 October 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Williams |
| Solicitors for the Applicant: | Pearsons Lawyers Pty Ltd |
| Counsel for the Respondent: | Mr James |
| Solicitors for the Respondent: | G & M Lawyers Pty Ltd |
THE COURT ORDERS THAT:
Subject to paragraph 2 below, the husband retain the property known and situate at Property A, being the land more particularly described in certificate of title, (omitted) (Property A property).
Subject to paragraph 3 below, by 4:00pm on Monday, 15 January 2018, the husband pay to the wife the sum of $538,157.
Contemporaneously with the payment to be made pursuant to paragraph 2 above, the wife provide to the husband a withdrawal of caveat (omitted) as recorded in the Register (Caveat) and indemnify the husband for the reasonable costs of such removal.
In default of performance of the obligations pursuant to paragraph 3 above, the husband pay the said sum of $538,157 into Court and, upon such payment, pursuant to s 106A of the Family Law Act 1975:
(a)the Registrar is directed to draw up and execute a notice of withdrawal of the Caveat and to provide the same to the solicitors for the husband so as to give effect to the validity of that notice;
(b)the Court reserves the question of costs and expenses of and incidental to the preparation of the notice of withdrawal of the Caveat, its execution by the Registrar and lodgement.
In default of the payment pursuant to paragraph 2 above:
(a)the Property A property be placed for sale on the open market (the sale) forthwith;
(b)by 4:00pm on Monday, 5 February 2018, the husband shall cause to be removed and disposed of all car parts and associated metal objects from the Property A property;
(c)liberty is reserved to the wife in respect of a failure or neglect to perform and observe the obligations in paragraph 5(b) above.
For the purposes of the said sale of the Property A property:
(a)by 4:00pm on Monday, 29 January 2018, the husband shall select and nominate to the wife, three Real Estate Agents;
(b)by 4:00pm on Monday, 5 February 2018, the wife shall choose one of the three Real Estate Agents as nominated by the husband;
(c)in default of performance of the obligations in paragraphs 6(a) or (b) above, the Real Estate Agent to be appointed for the purposes of effecting the said sale shall be selected by the President of the Real Estate Institute of Victoria (or his/her nominee), the costs of which selection shall be a selling expense of the sale;
(d)within 7 days of the nomination of the Real Estate Agent, the parties shall agree the sale price and terms of the sale, and failing agreement, the sale price and terms of the sale shall be as set by the President of the Real Estate Institute of Victoria (or his/her nominee), the costs of which, including preparation of the contract and associated sale documents, shall be included as further selling expenses of the sale;
(e)the parties shall follow the reasonable recommendations of the nominated Real Estate Agent in relation to the presentation, sale and the marketing of the Property A property;
(f)the wife shall provide a withdrawal of the Caveat in exchange for her share in the proceeds of sale pursuant to paragraph 7 below.
The proceeds of sale of the Property A property shall be applied as follows:
(a)to pay all costs, commissions and expenses of the sale;
(b)the balance to be divided, subject to paragraph 6(f) above, as to effect an overall division of the matrimonial property as to:
(i)60 per centum to the husband, and;
(ii)40 per centum to the wife.
The wife shall retain:
(a)the interim property distribution received from the sale of the property situate at and known as Property B (Property B property) pursuant to the order of this Court made by consent on 5 October 2016;
(b)her (omitted) Motor Vehicle;
(c)her (omitted) Shares;
(d)any monies standing to the credit of her bank accounts;
(e)her personal effects;
(f)her superannuation.
The husband shall retain:
(a)the interim property distribution received from the sale of the Property B property pursuant to the said consent order;
(b)any monies standing to the credit of his (bank omitted) account;
(c)any monies standing to the credit of the (omitted) Superannuation Fund;
(d)any monies standing to the credit of his bank accounts;
(e)the car parts and any funds received from their sale;
(f)the chattels in the Property A property;
(g)his person effects.
Save for the purposes of enforcing any orders made above:
(a)each party is solely entitled, to the exclusion of the other, to all other property in the possession of such party as at the date of these orders;
(b)each party foregoes any claims they may have to any superannuation, insurance or employment benefits belonging to or earned by the other;
(c)all insurance policies remain the sole property of the named owner;
(d)the husband indemnify the wife against any liability arising from his ownership of the Property B property;
(e)the husband indemnify the wife in respect to any liabilities associated with the (omitted) Superannuation Fund;
(f)save for sub-paragraphs 10(d) and 10(e) above, each party is solely liable for and indemnifies the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders, and any other liability that is incurred in their name;
(g)any joint tenancy of the parties in any real or personal property is severed.
IT IS NOTED that publication of this judgment under the pseudonym Norris & Norris is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 9086 of 2016
| MS NORRIS |
Applicant
And
| MR NORRIS, BY HIS LITIGATION GUARDIAN, MS L |
Respondent
REASONS FOR JUDGMENT
Introduction
By her amended initiating application, the applicant wife seeks final orders respecting the parties’ property interests. As these reasons discuss, the parties have already agreed upon interim property orders relating to the proceeds of sale of a property in Property B. The net proceeds of that sale were distributed in favour of the husband (as to $250,000), and the balance (being $1,161,074), to the wife. The parties, being unable to agree upon a final settlement of their remaining property interests, now seek the determination of their dispute.
As concerns an adjustment of the parties’ assets, the wife’s proposal was, in substance, for a 55/45% split in the husband’s favour.
The husband submitted that the asset pool should remain essentially as it is with no further adjustment of interests. On the husband’s proposal, this would reflect an overall adjustment of property interests equating to a 73/27% split in favour of the husband.
While an understanding of the parties competing proposals requires consideration of the background and circumstances of the parties’ relations, it is sufficient by way of introduction, to notice five matters. First, the subject relationship entailed a long marriage. Secondly, the husband had inherited a good deal of property. Thirdly, the husband is now severely affected by (omitted) disease. Fourthly, the wife is rapidly approaching retirement from the workforce. Fifthly, the proceedings in this Court were initiated in circumstances where the husband had listed one of their properties for auction.
I have concluded that orders should be made which reflect an overall adjustment of property interests equating to a 60/40% split in favour of the husband. My reasons for that conclusion are arranged as follows:
(a)Background;
(b)Procedural history;
(c)Evidence;
(d)Asset pool;
(e)Sub-section 79(1) – alteration of interests;
(f)Sub-section 79(2) – a just and equitable order
(g)Sub-section 79(4) factors;
(h)Equality as a starting point?
(i)Notional asset pool – add backs;
(j)Existing property interests;
(k)Disputed items of property;
(l)Resolution.
Background
The parties were largely in agreement in relation to their history and assets. The matters detailed below were relied upon by one or other of the parties for the purposes of the identification of factors to be considered to be relevant, whether pursuant to ss 79(4) and 75(2) of the Family Law Act 1975 (Cth), or otherwise.
The matters set out below include both matters that were common ground and my findings of fact upon particular issues. Where issues of dispute arose, I have addressed them separately in a later section of these reasons. Where it has been necessary to decide disputed issues of fact I have applied the civil standard of proof to the resolution of that issue: s 140 Evidence Act 1995 (Cth).
The husband, born on (omitted) 1954, is now aged 63 years. He worked throughout the marriage (as a (omitted)), but ceased work in 2000. He is on a disability pension.
The wife was born on (omitted) 1958 and is now aged 58 years. She currently works as a (occupation omitted) at the (employer omitted) earning ~$20,000 per annum. She is nearing retirement. During the marriage, the wife held employment. She also undertook the majority of the cleaning and cooking responsibilities in the home.
The parties married on (omitted) 1980. Following this hearing, the parties were divorced on 8 August 2017. There are two children of the marriage, now aged in their early thirties.
Immediately upon marriage, the parties commenced living together at a property situate at Property A. They rented this property from the husband’s aunt, Ms E.
The parties’ assets at the commencement of the marriage were modest. The husband owned a vacant block in (omitted). The wife had very little.
On 19 January 1984, the parties settled the purchase of a property situate at Property B. The purchase price was $55,000. The monies required to complete that purchase were comprised of: (a) $16,000 representing the proceeds of sale of the husband’s block at (omitted); (b) $25,000 being a gift from the husband’s aunt, Ms E; (c) $14,000 by way of savings. The parties did not occupy the Property B property but rented it for some 30 years until early 2017.
In 1989-1990, the husband inherited from the estate of Ms E, the Property A property then valued at $550,000 together with a sum of $93,338. The total value of those inheritances was ~$653,000.
In 1991, the husband purchased land at Property C for $45,000. The husband applied part of the inheritance from Ms E to complete that purchase. This property was later sold for $55,000 which sum was deposited to a cash management account with (bank omitted).
In 1990-1993, the husband inherited from his mother’s estate, between $93,000 and $98,000. The cash component from his mother’s inheritance was deposited to the husband’s superannuation account.
In 1997, the wife received in settlement of a medical negligence claim in the sum of $40,000.
In 2001, the parties established a self-managed superannuation fund, the (omitted) Super Fund (Fund), which was set up upon the advice and with the assistance of the parties’ financial advisor, Mr S (who made an affidavit that was filed in the wife’s case).
In 2001, the husband inherited from his Ms I’s estate, $110,575. This was deposited to the husband’s superannuation account.
In the course of 2002:
(a)the husband received a superannuation payment of $312,000.
(b)the wife inherited from her mother’s estate, an interest in a garage located in (omitted), together with $13,484.
(c)the parties’ daughter moved into the Property B property.
The parties are in disagreement about the arrangement whereby the daughter moved into the Property B property. The wife contends that the daughter stopped paying rent on that property in 2010. The husband contends that the daughter was not required to pay rent and instead was required to pay insurance, council rates and outgoings.
As noted, the husband has been diagnosed with (omitted) disease from which he has suffered for more than two decades. The parties do not agree upon the date, but the diagnosis was made at some stage between 1994-1998.
The parties’ relationship continued for some 35 years until they separated on 5 November 2015. The husband submits 5 November 2015 was the date of physical separation but that the parties were separated under the one roof for nearly 10 years beforehand. It will be recalled in this context that by 2000 the husband had been forced to give up his work by reason of his illness. He was then aged 46 years.
Again, the parties do not agree upon the date, but the husband ceased employment after 1998. The husband has been wholly unable to work since at least 2000. From the time when he ceased work following the diagnosis of (omitted) disease, and until the parties’ final separation in 2015, the wife has been the husband’s primary care giver. The evidence indicates that this became an increasingly arduous task. She was also the primary care giver to the adolescent children until they achieved their majority.
The wife contends that the later years of the marriage were attended by domestic violence, particularly as the husband’s disease progressed. The husband gave evidence that his health began to deteriorate in 2008.
On two or three occasions from 2008, the husband was admitted to hospital on account of the state of his mental health at that time. His admission to hospital arose on one occasion in consequence of an incident of domestic violence. The husband deposed that he had become paranoid and that while he was admitted as an in-patient, the wife convened a family conference with the husband’s medical advisors which conference included their children and Ms L. The husband deposed that following his discharge from hospital, “[f]ortunately, I was not placed into a nursing home. I deny that I was violent, however, I do admit that I was paranoid.” The wife deposed that from this time the parties slept in separate rooms.
Since separation, the wife contends that she has lived at (omitted). The husband contends that he lives in the Property A property. Each of the parties contests the veracity of the supposed living arrangements of the other. While the wife has rented accommodation, the husband continues to reside in the Property A property, which is unencumbered. While the husband deposed in his trial affidavit to having stayed with his sister, Ms L, on some occasions, the extent to which he does so is unclear: see below at [227]. While the wife is paying rent, that cost is defrayed in part by contributions made towards rent and living expenses by the son (when he has employment) and by another occupant of that rental accommodation.
The wife held a power of attorney for her husband from 2008 until 2016 when it was revoked. At the time of revocation, the husband executed both an enduring financial and medical power of attorney appointing his sister, Ms L, in her stead. It may be noted that the wife’s power of attorney was executed by the husband eight years after he was forced to cease work by reason of his disease.
In the period after 2008, in exercise of the power of attorney which had been conferred on her, the wife had drawn down progressively upon the capital standing to the credit of the Fund. At the date of trial, the monies held in that fund were practically depleted. The husband alleges and the wife denies that she mismanaged the funds in that account and that she indulged herself by taking holidays.
In July 2016, the parties agreed to sell the Property B property. However, the husband excluded the wife from the sale process. He auctioned the property on (omitted) 2016, entering a contract to sell the property for $1,430,000. The sale was the catalyst for the institution of the proceeding.
On 10 February 2017, the net proceeds of sale of the Property B property were divided between the parties as to:
(a)the wife $1,161,074
(b)the husband $ 250,000
By reason that the Property B property had always been employed as an income-producing asset, the realisation of that asset has attracted a liability for capital gains tax of $97,103.33.
The Property A property had an agreed value of $3 million.
Procedural History
On 21 September 2016, the wife commenced a proceeding in this Court, seeking an abridgment, so as to obtain interim relief respecting completion of the sale of the Property B property.
On 4 October 2016, the husband filed a response that he later amended.
The following day, 5 October 2016, the parties agreed in consent orders that provided for the release of the net proceeds of sale to the parties by way of interim property orders. A judge of this Court made those consent orders and further orders to regulate a trial of the proceeding. Those orders sanctioned the parties’ interim property settlement.
A private mediation, held on 7 February 2017, was unsuccessful.
On 10 February 2017, the parties divided the net proceeds of sale of the Property B property in the manner described above.
While the parties’ respective outlines of argument identify the material upon which they rely, it is convenient to note that the husband relied upon a report from his treating neurologist, Dr P, who was not cross-examined (see below at [226]). His evidence was relevant to two subjects; first, the husband’s capacity to deal with the stress associated with a trial; secondly, the husband’s likely prognosis (which is poor).
Dr P’s report indicates that the husband’s health, the effect of (omitted) disease and his medication combine to make it difficult for the husband to cope under stress. More specifically, the effect of stress has a propensity to disorient the husband in processing his thought. Consequently, Dr P considered that the husband would find it difficult to cope with the trial including, in particular, in giving evidence and addressing questions in cross-examination.
The opinion evidence was also supported by an affidavit sworn by the husband’s sister, Ms L. She deposed of her observations concerning the husband’s propensity to become agitated, anxious and distressed when placed under significant pressure. Ms L further deposed as to the husband’s difficulty in expressing himself in such circumstances.
My observations of the husband in the course of the trial served to confirm this opinion evidence.
Those matters supported an application by Mr James of counsel for the husband, for the appointment of Ms L as litigation guardian. This order was made, by consent, on the first day of trial. As noted, since 2016, the guardian has held a medical and financial power of attorney for the husband.
A further consequence of the husband’s illness was that the course of the trial altered. Although the parties both proposed to give evidence, this did not occur. At the close of the first day of trial, I raised with the parties’ the desirability (in light of Dr P’s report and my observations of the husband at trial), and the necessity in all the circumstances for the husband to undergo cross-examination. After some discussion, the parties agreed to consider the position.
On the morning of the second day of trial, Mr James indicated that following a conference with his client and the guardian, a decision had been made that the husband would not give evidence. Mr Williams for the wife adopted the position, sensibly, that no submission would be made that an adverse inference should be drawn against the husband by reason of his failure to subject himself to cross-examination. At the same time, he reserved for final submissions the question of what weight should appropriately be assigned to particular aspects of the husband’s affidavits and his financial statement.
In my view, the parties and their counsel are to be commended for the stance that they adopted at trial in relation to this aspect of the matter.
Parties’ positions at trial
By her amended initiating application the wife sought orders that the husband retain the Property A property. She proposed that she receive payment from the husband effecting a 45% division of the matrimonial property pool and that the husband should thus retain a share equal to 55% of the pool. The wife’s application for final relief was made upon the premise that each party retain the interim property distributions made upon the sale of the Property B property.
By his amended response, the husband agreed that he should retain the Property A property and that each party retain the interim distribution previously received. He also sought orders that the wife remove a caveat that she had lodged on title to the Property A property, that the parties share equally the capital gains tax liability incurred on realisation of (and that the wife should reimburse him for the advertising costs incurred in selling), the Property B property.
The parties were generally agreed that they should retain the sundry items of personal property in their possession at the date of trial.
Otherwise, the husband’s outline – which was filed before the order for appointment of a litigation guardian – contended that the Court should make such further orders to give effect to the settlement of the parties’ financial affairs pursuant to ss 79 and 75(2) as the Court deemed meet.
The final positions as adopted in closing address are dealt with below.
Evidence
The wife and husband relied upon their respective affidavits and financial statements. Their evidence recounted the history of the parties’ relations and addressed the topics that have been summarised above. Insofar as I have recounted those matters above, I have examined that evidence and do not repeat it.
The wife was cross-examined upon her evidence in the course of which she presented as an honest and reliable witness who sought to deal with the questions that were asked of her. I generally accept her evidence.
The husband relied upon his affidavits sworn 3 October 2016 and 27 March 2017, together with his financial statement sworn on 27 March 2017 and the affidavit of Dr P. His evidence also recounted a history of the parties’ relations and addressed the topics that I have analysed above and again, I do not repeat it. I have no reason to doubt the husband’s evidence but must recognise that it was not tested.
The parties paid little attention during the trial, or in their submissions, to the matters addressed in their respective financial statements. I understood the position taken in relation to the financial statements to reflect their common position as concerns sub-s 75(2) factors. While I have considered them, I do not discuss them further.
Where there was an inconsistency between the parties’ versions of events, I have, if possible, relied upon contemporaneous documents to resolve those issues. Otherwise, I have had to evaluate the evidence according to the probabilities of the matter.
The matters detailed in the parties’ evidence has been addressed in my findings as set out in the Background to this proceeding above.
Asset Pool
As outlined above, there is a significant measure of agreement concerning important issues in this proceeding. On day two of the trial the parties’ agreed as to the subject asset pool. The parties’ counsel informed the Court that the parties had then agreed balances for the relevant assets as at the date of separation and as at the date of trial. For the sake of clarity, I have re-arranged that balance sheet so that the assets of the husband and the wife may be separately identified. The agreed pool comprised their accumulated assets and few liabilities and was reflected in a balance sheet that they handed up as follows:
Asset Ownership Value Husband Property A Property Husband $3,000,000 Distribution (Property B property) Husband $250,000 Car parts Husband E$40,0001 Joint funds retained by H at separation ((bank omitted) account) Husband $25,6052
$4,9573(bank omitted) account Husband $93,0004
$4,4145Wife Distribution (Property B property) Wife $1,161,074 25% share in (omitted) property Wife $3,750 (omitted) motor vehicle Wife $23,000 (omitted) shares Wife $3926 Liabilities Ownership Value (omitted) Mastercard Wife $5,1647 CGT for Property B sale Joint $97,104 Superannuation Ownership Value (omitted) Super fund Joint $15,0008
$999(omitted) Super Wife $21,078
Notes:
1 Value of car parts as estimated by wife (disputed by husband)
2 (bank omitted) account balance as at separation
3 (bank omitted) account balance as at hearing
4 (bank omitted) account balance as at separation
5 (bank omitted) account balance as at hearing
6 Wife had withdrawn $10,000 for post separation living expenses
7 (omitted) Mastercard balance as at separation
8 (omitted) Super fund balance as at separation
9 (omitted) Super fund balance as at hearing
Ordinarily, one would only list the parties’ assets and liabilities as at the date of hearing, however, in this case it has been convenient to identify the agreed value of particular assets at the date of separation. My findings as to the net asset pool are addressed at [167]-[169] below.
Applicable Principles
Sub-s 79(1) – an alteration of property interests
The parties’ counsel made careful submissions upon the applicable principles and in doing so identified a number of authorities.
Part VIII of the Family Law Act 1975 concerns the subjects, Property, Spousal Maintenance and Maintenance Agreements, and is comprised of ss 71 – 90. The provisions in Part VIII are augmented by the further provisions contained in Parts VIIIA – Part VIIIB, ss 90AA – 90MZH.
The alteration of property interests of parties to a marriage is provided for by s 79. In property settlement proceedings with respect to the property of parties to a marriage, the Court is authorised by para 79(1)(a) to make such order as it considers appropriate. The power to make orders for the adjustment of property interests rests upon two broad principles. First, orders made under s 79 should, so as far as is practicable, finally determine the parties’ financial relations. Secondly, s 79 implicitly recognises that the parties to a marriage are equal in status: Mallet v Mallet (1984) 156 CLR 605, 608 (Gibbs CJ).
The power conferred by sub-s 79(1) is engaged only in a property settlement proceeding, being a proceeding with respect to the property of the parties or either of them. The power extends only to an adjustment of interests in the property of the parties.
In the Family Law Act 1975, ‘property’ means:
. . . property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion (s 4)
As appears from the text of this definition, the property with which property settlement proceedings is concerned is property to which the parties are entitled, whether by way of possession or reversion. By way of comparison, I note that by s 78, the Court is authorised to grant declaratory relief concerning the right or title of a party to existing interests in property together with ancillary relief by way of sale, partition or possession. The expression ‘property’ is used in the Act in a comprehensive sense and extends to the property of the parties or either of them: Kennon v Spry (2008) 238 CLR 366, [52], [78] (French CJ); [91], [126] (Hayne and Gummow JJ), [154], [175] (Heydon J), 200], [224] (Kiefel J); Beklar & Beklar [2013] FamCA 327, (Ryan J)
Sub-section 79(1) confers power on the Court to make an order for the settlement or transfer of property as it may consider appropriate in the circumstances of the particular case. Sub-section 79(1) provides that “the court may make”, so conferring a power which the Court shall exercise if the ground for doing so is made out: cfLeach v The Queen (2007) 230 CLR 1, [38]; Vale v Sutherland (2009) 237 CLR 638, [18].
Where one or both of the parties have instituted property settlement proceedings, para 79(1)(a) confines the ambit of the power to make an order that the Court considers appropriate to “altering the interests of the parties to the marriage in the property.” Paragraphs 79(1)(c)-(d) further define the ambit of that power in terms that expressly authorise the Court to make “an order for a settlement of property in substitution for any interest in the property” and an order that requires either or both of the parties to the marriage to make “such settlement or transfer of property as the court determines.” Other parts of sub-s 79(1) concern bankruptcy and are of no relevance.
Structurally, sub-s 79(1) requires the Court to identify the parties’ existing interests in property (as defined) and then authorises that the Court may make orders that alter those interests. The “question presented by s 79 is whether those rights and interests should be altered”: Stanford & Stanford (2012) 247 CLR 108, [39] (French CJ, Hayne, Kiefel and Bell JJ). The process by which the answer to that question is obtained is considered below.
Sub-s 79(2) – the just and equitable criterion
Sub-section 79(2) proscribes the making of an order unless a certain criterion is satisfied. It reads:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
It is immediately apparent that sub-s 79(2) cannot be side-stepped.
The scope and operation of sub-s 79(2) was given detailed consideration in the seminal decision of Stanford & Stanford (2012) 247 CLR 108. The plurality held in relation to sub-s 79(2) that the determination whether it was just and equitable to make an order under sub-s 79(1), was an essential inquiry to be undertaken before any consideration was given to the matters prescribed by sub-s 79(4). The plurality emphasised that the issues raised by sub-s 79(2) and (4) were not to be conflated or merged: (2012) 247 CLR 108, [35], [40], [51].
It is axiomatic that the criterion ‘just and equitable’ is a criterion that does not admit of exhaustive definition: Stanford at [36] citing Mallet, supra (1984) 156 CLR 605, 608 (Gibbs CJ). Rather the expression was to be understood as being a “qualitative description of a conclusion reached after examination of a range of potentially competing considerations.” Confirming that the power conferred by s 79 was not to be exercised by the application of fixed rules, the plurality identified three propositions that it regarded as being of ‘fundamental’ importance to the determination whether it was just and equitable for the Court to make an order adjusting property rights: (2012) 247 CLR 108, [37]-[40].
First, the consideration whether it is just and equitable to make an order must begin by the identification of the existing legal and equitable interests of the parties in the subject property. The ascertainment of those existing interests is to be undertaken upon settled common law and equitable principles. The necessity to do so arises from the nature of the power conferred by sub-s 79(1) – the alteration, settlement or transfer of property. This exercise of power cannot be undertaken until the Court has identified the property itself.
Secondly, the broad discretion conferred by s 79 is not unfettered. It is not to be exercised upon some idiosyncratic view of the instant claim. The determination whether it is just and equitable that an order be made is not to be undertaken by an a priori assumption that “the parties’ rights to or interests in property are or should be different from those that then exist.” Instead, the Court will respect the parties’ existing legal and equitable interests in property. The determination of those existing interests is undertaken upon settled common law and equitable principles. Accordingly, interests in property that is, or has in the past been, enjoyed in common falls to be decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses: [39] citing Hepworth v Hepworth (1963) 110 CLR 309, 317 (Windeyer J); Wirth v Wirth (1956) 98 CLR 228, 231-2 (Dixon CJ). The bare fact of separation does not permit a Court to disregard the parties’ rights and interests in property or to make whatever order may seem to be fair or just: [43].
Thirdly, the analysis whether it is just and equitable to make an order adjusting property interests does not begin from an assumption that either party “has the right to have the property of the parties divided.” It does not contain an embedded assumption that either party “has the right to an interest in marital property which is fixed by reference to the various matters . . . set out in s 79(4).” The flaw inherent in such assumptions is that they conflate the statutory requirements of sub-s 79(2) and (4) and ignore the principles that are laid down in the Act respecting adjustment of property interests: [40].
When it is said that the power to make a property settlement order must be exercised in accordance with legal principles, it can be seen that the Act lays down two quite distinct principles in sub-ss 79(2) and (4) respectively: first is to determine whether it is just and equitable that the Court should make an order adjusting existing interests in property; secondly, when deciding what order might be made, the Court must consider the matters in paras 79(4)(a)-(g): [38], [40] citing R v Watson; Ex parte Armstrong (1976) 136 CLR 248, 257 (Barwick CJ, Gibbs, Stephen and Mason JJ). On this analysis, if the first question is answered ‘No’, the second question does not arise.
In Stanford, the plurality explained that adherence to those propositions could accommodate the manifold circumstances in which property settlement proceedings arose for determination. Stanford underlines the importance of respecting inter alia: (a) binding agreements that the parties have made pursuant to Part VIIIA of the Act; (b) the autonomy indicated by agreements that the parties made, albeit that they may not be legally binding; (c) circumstances in which parties have, commonly, not expressly considered whether or not, or to what extent, there should be some different arrangement concerning assets (whether held individually or in common) while their marriage subsists. In each case, the parties stated and unstated assumptions are recognised as meaning that “the arrangement of property interests, whatever they are, is sufficient for the purposes of that husband and wife during the continuance of their marriage”: (2012) 247 CLR 108, [41].
Upon that premise, Stanford insists that there should be a principled reason for interfering with the existing legal and equitable interests whatever may have been their stated or unstated agreements or assumptions about property for so long as a marriage subsists.
In the pluralities’ analysis of whether it is just and equitable for an order to be made under sub-s 79(1), a conclusion that that requirement is fulfilled could readily be satisfied where one or both of the parties have made a choice that they no longer live in the marital relationship. Then, it may be just and equitable for an order to be made adjusting property interests because: (1) the parties will no longer have common use of the subject property; (2) their express or implicit assumptions concerning such use have been brought to an end by reason of the exercise of the choice no longer to live in that relationship. The Court also recognised that in some circumstances it could be demonstrated that it was just and equitable to make an order adjusting property interests (as where it was demonstrated that one party’s unmet needs could not be answered by a maintenance order). Other circumstances apart from need might also ground a conclusion that it was just and equitable to make an order adjusting property interests so as to satisfy sub-s 79(2): [45], see also [18]-[19], [46]-[47].
The plurality concluded:
. . . any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of their marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the Court make a property settlement order. [42], and see [44]
Termination of the marital relationship thus undermines the foundation for an assumption as to the use of the parties’ property. The removal of that foundation in turn provides the platform for a conclusion that it may be just and equitable to adjust the parties’ property interests.
Their Honours concluded that nothing in their reasoning should be understood as denying “the importance of considering any countervailing factors which may bear upon what, in all the circumstances of the particular case, is just and equitable”: [46]. As Stanford illustrates, a countervailing factor that is of central importance is the need to consider the effect which the proposed order may have on the respondent to the application.
Heydon J, who agreed in the result, accepted that the wife’s non-financial contributions over a 35 year marriage may well have been decisive in supporting a conclusion that the parties’ legal entitlements in property did not reflect those contributions: [64]. Yet his Honour held that the burden of proof had not been discharged on the issue whether it would have been just and equitable to have made an order adjusting property interests had the wife not died: [60], [65].
Consideration of the application of those principles in Stanford is instructive. There the parties had each been in a prior marriage. Each had children from their respective marriages but had had no children together. The husband had acquired the matrimonial home following the breakdown of his first marriage. The parties had lived in that home for much of their relationship. It was a long marriage: [4]-[5].
By his will, the husband left a life interest in the matrimonial home to his wife: [6]. After the wife suffered a stroke she was admitted to care and later still suffered dementia. During that period, the husband continued to provide for her including by establishing a trust from which ancillary medical and other expenses could be met: [7]. The wife’s expenses of care were met via her veteran’s pension: [57], [62].
The wife’s daughter, as guardian, instituted a proceeding seeking an order for the sale of the home and distribution of the proceeds: [8].
The High Court reversed the decision of the Full Court and varied the order of the Magistrates Court, to dismiss the application with costs. The substantive reason for doing so was that it was not just or equitable to make an order in circumstances where the husband had provided for her care in the manner described. Since the wife had suffered dementia it had been open to apply for maintenance if the need arose; however, the wife had died. Quite apart from her death, the Court concluded that it was necessary for the guardian to demonstrate that, had the wife made a property application during her lifetime, she would have satisfied the requirements of sub-s 79(2) and so demonstrated that it was just and equitable for an order to be made adjusting the parties’ interests in their existing property: [2], [48]-[49], [60]-[64].
The Court held that no basis was shown for a conclusion that it would be just and equitable to make an order adjusting property interests. The fundamental error identified by the High Court was that there had been no consideration of the effect upon the husband of the proposed order that there be a sale of the home in which he lived. The subsidiary error was that no consideration had been given whether a maintenance order would sufficiently have met the needs of the wife. Somewhat curiously, no consideration was given to the fact that under his will the husband had granted a life interest to the wife: [49]-[53]. It may be that the testamentary disposition (capable of being changed by a later will), was not regarded as conferring an equitable interest in the wife.
The Court must separately consider and be satisfied that it is just and equitable that an order be made adjusting property interests before proceeding to decide what order should be made. There will be circumstances, of which Stanford is an example, in which the Court should conclude that it has not been established that it is just and equitable to make an order: see also Bevan & Bevan [2014] FamCAFC 19, Whent & Marband [2017] FCCA 1873.
By way of overview, the concepts embodied in the criterion ‘just and equitable’ are neither new, nor confined to the Family Law Act. For example, the same or similar criterion was applied in the determination whether a company or quasi-partnership should be wound up in circumstances where the objects of the undertaking were impossible of further attainment or the common understanding of the members could no longer be realised: see, Callaway, The Just & Equitable Ground, 61; Kennon v Spry (2008) 238 CLR 366, [95] (Hayne and Gummow JJ). Relevantly, the Court may refuse such relief where it is not just or equitable to exercise its discretion to do so: Callaway, supra at 98, 105. In a similar vein, in Norbis v Norbis (1986) 161 CLR 513, Mason and Deane JJ observed at 521 that the very wide discretion conferred by s 79 was not unlimited but was, “conditioned by the requirement that it is just and equitable to make the order (s.79(2)) and that the Court take into account the matters specified in s.79(4) and the general principles embodied in ss. 43 and 81, so far as they are applicable.”
Is it just and equitable to make an order?
The parties presented it as being common ground that the question whether it was just and equitable to make an order adjusting the parties’ existing property interests had already been addressed.
It was submitted that, by reason of the interim order that had already been made by consent with respect to the division of the net proceeds of sale of the Property B property, the requirements of sub-s 79(2) had been addressed and necessarily the Court had held that s 79 orders should be made adjusting the existing property interests of the parties.
The parties, submitting that they had already passed through the gateway posed by sub-s 79(2), further submitted that the Court was not required on this final hearing to revisit the question whether it was just and equitable to make an order. On one view, the adoption of such an approach would seem to immediately defeat the husband’s contention that the adjustment that has already been made was, in and of itself, a just and equitable final adjustment of property. The question whether any further adjustment of property interests remains to be answered.
Although the Court has exercised its discretion under para 79(6)(a), holding that it is appropriate to make an interim order to adjust the parties’ existing property interests respecting the Property B property, this conclusion does not impel a further conclusion that another adjustment, beyond that provided for by the interim property orders made by consent, should now be made.
It is just and equitable in this case for an order to be made adjusting property interests because the parties no longer have common use of their property; in particular, the Property A property: cf Stanford, supra (2012) 247 CLR 108, [44]. Rather, it is a case in which they had proceeded upon an implicit assumption, which subsisted during their relationship, concerning the common use of property. This assumption ended upon the parties’ choice no longer to live in a relationship.
This is not a case which the parties relied upon any formal or informal non-binding agreement as to how their property interests would be divided: cfBevan&Bevan [2014] FamCAFC 19, [82].
I have considered the consequences that may follow for the husband if relief be granted effecting an adjustment of property interests. This is not a case in which the primary relief sought by the wife was for a sale out of Court: cf Stanford, supra (2012) 247 CLR 108, [8], [46]-[47]. Accepting, however, that relief by way of sale is sought by the wife in the alternative (i.e. in default of payment of a sum of money reflecting a just and equitable adjustment of property interests), does not mean that such relief is either unjust or inequitable.
The possible sale of a home is a not uncommon consequence of such proceedings and does not necessarily feature as a prominent consideration in the determination of what relief is just and equitable in all the circumstances: cfBevan, supra [2014] FamCAFC 19, [90]. Here, the Property A property is and has been wholly unencumbered since it was inherited in 1989-90.
And it is not a case in which the wife’s needs are being or could be sufficiently met by a maintenance order – there is no capacity for the husband to meet such an order and no case was ever advanced on that basis: cf Stanford, supra.
I conclude that the requirements of sub-s 79(2) are satisfied. It is therefore appropriate to turn to the further question of what, if any, order is appropriate to be made adjusting the parties’ property interests.
Sub-s 79(4) factors
Sub-section 79(4) then requires, when considering what order (if any) should be made in a property settlement proceeding, that the Court shall take into account each of the seven matters addressed in paras (a)-(g). The circumstances which the Court is required to take into account have been identified as falling within three broad classes: (1) the parties contributions of all kinds; (2) the parties’ present and future needs, means and resources, earning capacity, actual and potential; (3) any other fact or circumstance which justice requires be taken into account: Mallet, supra (1984) 156 CLR 605, 608 (Gibbs CJ); and see below at [106]-[109].
It is convenient to address paras 79(4)(a)-(g), so far as relevant, below. Before doing so, it is necessary to identify the settled principles for the determination of an application for adjustment of property interests.
Hickey & Hickey (2003)
Until Stanford, the settled approach that was taken to the determination of a claim for adjustment of property interests under s 79, was a four-stage process as articulated by the Full Court of the Family Court in Hickey & Hickey; the Attorney General for the Commonwealth of Australia (2003) FLC ¶93-143. The decision was given upon a special case concerning the proper treatment of superannuation. However, Nicholson CJ, Ellis and O’Ryan JJ at [39] held the four-stage process under s 79, although interrelated, was follows:
(a)first, identify the parties’ assets, liabilities and financial resources at the date of hearing; calculating the net value of their property;
(b)secondly, ascertain the parties’ contributions (both financial and non-financial), within the meaning of paras 79(4)(a)-(c) inclusive and then “determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property”;
(c)thirdly, give consideration to the other factors prescribed by paras 79(4)(d)-(g), including the matters, so far as relevant, as referred to in sub-s 75(2) to decide if any further adjustment to the percentage assessment of contributions is warranted;
(d)fourthly, consider the overall effect of those findings and determinations and resolve what order is just and equitable in all the circumstances of the case?
For completeness, I note that the Full Court observed at [40], that because s 79 requires consideration of the parties’ entire property interests, they were subject to an obligation of full and frank disclosure.
Each of the parties cited more recent Full Court authority which held that the four-stage process articulated in Hickey need not be followed rigidly: citing Bevan & Bevan [2014] FamCAFC 19, [18]-[19] (Bryant CJ and Thackeray J), [97] (Finn J agreeing). At the same time each submitted that it remained an approach which was generally appropriate to follow in the majority of cases when adjusting property interests under s 79. In a similar vein, the Full Court has recently affirmed that a holistic approach should be made when deciding an application under s 79: see Wallis & Manning [2017] FamCAFC 14, [23]; citing Dickons & Dickons (2012) 50 Fam LR 244, [24]. The Full Court’s earlier identification in Hickey of an interrelated four-stage process of analysis thus expresses the need for a holistic approach.
The principles stated in Hickey which are applied to the determination of property settlement proceedings are settled and must accommodate the necessity of first deciding whether the requirements of sub-s 79(2) have been satisfied: is it just and equitable to make an order? Just as the Full Court described the four-stage approach to the provisions in s 79 as interrelated, so too, the decision whether it is just and equitable to make any order adjusting property interests requires consideration of the matters in sub-s 79(4). To do otherwise would require a decision of the just and equitable requirement in sub-s 79(2) divorced from the manifold contributions – financial and non-financial – of both parties.
It was also accepted in the course of closing addresses that the present was not a case in which it would be inappropriate to follow the four-stage approach articulated in Hickey, supra. I accept those submissions and adopt that approach. There are however, some issues that require separate consideration.
Equality as a ‘starting point’
There was some discussion in the course of argument whether, as between the parties to a long marriage, the appropriate starting point for an adjustment of property was to regard equity as being equality such that, all other things being equal, orders should be made for an equal division of the net assets in the pool. In JEL v DDF (2000) FLC ¶93-075, Holden and Guest JJ held at [152(a)] that there was no presumption of equality of contribution or partnership.
In Mallet v Mallet, Gibbs CJ observed that some judgments stated, perhaps circumspectly, that after a long marriage, where both parties had worked together, and built up their assets by joint endeavour, even if the efforts of one party had been that of home maker and parent, equality should be considered the normal starting point: (1984) 156 CLR 605, 609. Although two members of the Court dissented as to the result of the appeal, all were agreed that the very wide discretion conferred by s 79 did not authorise the adoption of a legal presumption that the respective values of the parties’ contributions should be regarded as equal: see at 609-610 (Gibbs CJ), 624-625 (Mason J); 635-636 (Wilson J); 639-640 (Deane J), 646-647 (Dawson J).
However, each judgment in Mallet recognises the ultimate conclusion may often be that an equal division of property is a just and equitable adjustment of those interests in marriages of long duration. For example, Mason J, who dissented as to the result, at 625 stated:
No doubt a conclusion in favour of equality of contribution will be more readily reached where the property in issue is the matrimonial home or superannuation benefits or pension entitlements and the marriage is of long standing. It will be otherwise where the property in issue consists of assets acquired by one party whose ability and energy has enabled the establishment or conduct of an extensive business enterprise to which the other party has made no financial contribution and where that party’s role does not extend beyond that of homemaker and parent.
This reasoning recognises that s 79 is concerned with the adjustment of property interests of parties to a marriage and that some property may have been acquired before the marital relationship began.
In Mallet, Wilson J at 636 expressly endorsed the statement by Evatt CJ in In the Marriage of Rolfe (1979) FLC ¶90-629 at 78,272-78,273, that the purpose of sub-s 79(4)(b) was to ensure just and equitable treatment of a wife who had contributed as a homemaker and parent. Evatt CJ had said that “provided she makes her contribution to the home and to the family the Act clearly intends that her contribution should be recognized not in a token way but in a substantial way.” Wilson J at 636 considered that equality should be the measure, other things being equal, but “only if the quality of the respective contributions of husband and wife, each judged by reference to their own sphere, are equal. The quality of the contribution made by the wife as homemaker or parent may vary enormously, from the inadequate to adequate to the exceptionally good.”
Deane J at 639, also held that the discretion conferred by s 79 was neither fettered nor controlled by a presumption of equality, but considered that the circumstances of a particular case may well make equality the appropriate starting point in determining what were the appropriate orders to make under s 79. His Honour recognised that the task was to be performed by reference to the nature and form of the particular marriage, observing at 641 that it was relevant to consider whether the relationship was one in which:
. . . the parties have adopted the attitude that their marriage constituted a practical union of both lives and property . . .
See also Dawson J at 646-648. The observations of Deane J were endorsed by the Full Court in both Dickons & Dickons (2012) 50 Fam LR 244, [21] and Wallis & Manning [2017] FamCAFC 14, [23].
Two matters are of immediate significance to this case. First is that no legal presumption of equality of division can be applied to the net property of parties to a long marriage. The rejection of any such presumption merely directs attention to the inquiries that are properly required for the determination of an application made under s 79. Secondly, there is no justification for the adoption of some a priori assumption that the value attaching to the non-financial contributions of either party should be ascribed a lesser value or be measured upon some discounted basis, merely because they are of intangible value. For example, it would seem absurd to remove the value of goodwill from a prosperous enterprise merely because it was an intangible asset.
For example, in Bulleen & Bulleen, Cronin J recognised the caution of adopting an over-zealous ascertainment of the parties’ contributions and held that s 79 instead required the ascertainment and weighting of those contributions; a process which his Honour described as follows:
The weighting process is not a simple mathematical calculation based upon financial contributions. It is the disparity in contributions which is important. The disparity is traditionally expressed in percentage terms: [2010] FamCA 187 at [19].
Cronin J identified at [20]ff that the underlying difficulty that confronted the evaluative task under s 79 arose from the need to make a crucial comparison between fundamentally different activities. Thus, while financial contributions were capable of objective assessment, the non-financial contributions were much more difficult of assessment. His Honour held that it would have been wholly inappropriate to retrospectively allocate non-financial contributions according to some monetary worth. On the facts as found in that case, Cronin J characterised the relationship as one in which the parties had regarded their respective roles as important and as being one in which they had contributed to a common goal. At the same time, his Honour acknowledged that there could be some contributions outside of their partnership which identifiably affected the parties’ wealth: at [26], [40].
The practice to express, in percentage terms, the parties’ contributions (financial and non-financial) is not to be misunderstood as the product of some precise mathematical formula. It is not and cannot be such a product where one of the integers in the assessment is the result of an evaluation of the parties’ non-financial (i.e. intangible) contributions.
Creation of notional pool – add backs
In deciding whether it is just and equitable that an order should be made adjusting property interests, it is necessary to first identify the parties existing property interests as at the date of trial. To do otherwise would be to approach the question posed by sub-s 79(2) in an unprincipled fashion. The question, “is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist”: Stanford (2012) 247 CLR 108, [37]-[39] (French CJ, Hayne, Kiefel and Bell JJ) (emphasis added); see also Bevan & Bevan [2013] FamCAFC 116, [50], [79] (Bryant CJ and Thackeray J), [155]-[156] (Finn J).
The need to identify the existing property interests arises because the power conferred by para 79(1)(a) is to make orders with respect to the ‘property’ of the parties to the marriage or either of them. Commonly a problem is presented by the fact that one of the parties has unilaterally disposed of such assets, with the result that such property no longer exists. In that event, the property so disposed of is unlikely to constitute property of the parties to the marriage and, “thus is not amenable to alteration under s 79”: Bevan, supra [2013] FamCAFC 116, [79] (Bryant CJ and Thackeray J), [157]-[158] (Finn J). It will be recalled that property as defined under the Act means property to which the parties or one of them is entitled. Where the property has been dissipated, that property can no longer be identified as property to which either party is entitled at the date of trial, whether in possession or reversion. It is a separate question as to what orders can be made.
A traditional approach to the resolution of such property disposal has been notionally to ‘add back’ the sum so withdrawn by one party. By this means, the Court is enabled to assess the parties’ net assets as they would have been but for the unilateral dissipation of the parties’ assets. The process of making notional add backs to an asset pool is perhaps akin to the reconstruction of a balance sheet by the inclusion of provisions in respect of assets or liabilities so as to present a true and fair view of the parties’ net asset pool as at the date of trial. Both liabilities and assets may be notionally adjusted where the justice of the case warrants such an approach. Adjustment is not made as of course.
Complex questions have arisen whether the ‘add back’ process is available as an exercise of power and by what means the Court may address circumstances in which property that has been dissipated and no longer exists: Beklar & Beklar [2013] FamCA 327, [134] (Ryan J).
Part of that complexity arises from the operation of sub-s 79(4)(a) which requires that account be taken of the parties’ contributions to property, irrespective of whether it has ceased to be property of the parties. That is, in deciding what order (if any) should be made under s 79, account must be taken of contributions (whether by way of acquisition, conservation or improvement of property), notwithstanding that such property has been sold or transferred before the date of trial. As sub-s 79(4)(a) requires the Court to take account of the contributions of a party respecting property which has ceased to exist, it would follow that it is authorised to take into account property that one party has unilaterally appropriated or disposed of and which no longer exists. Those observations do not mean that orders adjusting property may be made respecting property that does not exist. To the contrary, it is only to recognise that sub-s 79(4)(a) requires that account be taken of property that may no longer exist in deciding what order (if any) should be made: see also paras 80(1)(a)-(l).
Relatedly, it is not uncommon that parties will be driven to expend capital pending determination of a property settlement proceeding. In that context, there is no appropriate basis for notionally adding back moneys that have been spent on meeting reasonable living expenses. So it is said that neither the Act or case law “require the parties to go into a state of suspended economic animation once their marriage breaks down pending resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge”: M & M [1998] FamCA 42, [2.11]; Tuckson & Elsey [2017] FamCAFC 145 [106].
In Vass & Vass [2015] FamCAFC 51, the Full Court considered the resolution of issues presented by the husband having paid $50,000 purportedly in repayment of a loan to his parents and a further $25,000 in servicing a mortgage and personal living expenses. Strickland, Murphy and Tree JJ held at [138] that the process of undertaking a calculation of notionally adding back monies to an asset pool did not involve error per se. Their Honours rejected a suggestion that Bevan or Stanford, supra had held to the contrary.
More recently, the Full Court affirmed that conceptually, the process of adding back may be an entirely permissible course: Rankin & Rankin [2017] FamCAFC 29, [57]-[58] (May, Thackeray and Aldridge JJ). As the result in that appeal demonstrates, the Court retains a discretion as to what sum should be added back in the circumstances: [64]-[66].
In Beklar & Beklar, Ryan J undertook a detailed examination of authority and identified the following principles:
(a)financial losses should, in general, be shared whether or not they are a joint liability, except where the conduct of the party:
i)entailed a deliberate course of conduct designed to reduce or minimise the effective worth of the parties’ assets;
ii)was reckless, negligent or wanton so as to reduce or minimise the value of the parties’ assets;
[2013] FamCA 327, [131], citing Kowaliw & Kowaliw (1981) FLC ¶91-092;
(b)such losses need not, however, be shared equally: [132]-[133], citing Kowaliw, supra; Browne& Green (1999) FLC ¶92-873. In the latter case, the husband was held solely responsible for losses, despite the absence of any recklessness on his part;
(c)complex and discretionary considerations were involved in resolving issues whether: (i) a loss should be notionally added back; (ii) this constituted a s 75(2) factor, or; (iii) it should be dealt with upon some other basis: [134];
(d)where property has been dissipated by waste (such as being damaged or sold at undervalue), a notional add back is allowable: [134] citing Townsend & Townsend (1995) FLC ¶92-569;
(e)a notional add back is not confined to waste; it is also allowable where identifiable items of property have been disposed of in a bona fide manner, where no, or no reasonable, explanation has been given for an assertion that the property no longer exists or never existed: [135] citing B & B [2000] FamCA 1301;
(f)by contrast, the Court will in general be more reluctant to notionally add back monies that were expended upon reasonable living expenses: [135] citing M & M [1998] Fam CA 42;
(g)rather, monies that are shown to have been reasonably disposed of should not, absent exceptional circumstances be the subject of a notional add back: [137] citing C & C [1998] FamCA 143. A finding of extravagant spending is a fact intensive inquiry in which the needs and income of the party will be relevant: [140];
(h)absent exceptional circumstances, a trial judge should deal with the property existing as at the date of hearing; however, the justice of the case may make it appropriate to add back assets that have been dissipated during the marriage or post separation – such as by gambling or extravagant living: [136] citing M & M [1998] FamCA 42, [2.10];
(i)the treatment of legal fees is a matter falling for discretion: [141] citing Chorn & Hopkins [2004] FLC ¶93-204. Where the legal fees were funded by the early release of monies to enable a party to prosecute their property claim, they would normally be added back: [143] citing DJM v JLM (1998) FLC ¶92-816;
(j)an alternative approach can be taken under para’ 75(2)(o) whereby an adjustment is made to require a party to account for monies that have been dissipated – as by gambling losses: [145]-[146] citing De Angelis & De Angelis (2003) FLC ¶93-133.
In a statement that echoes the principles in Mallet, Ryan J held that it would be wrong to elevate prior decisions on this topic as representing the normal (i.e presumptive) approach to be taken in such cases: [144].
In Talbot & Talbot, the Full Court allowed that where a party has unilaterally disposed of property which no longer existed at trial, the justice of the case may entitle the Court to take account of the property by notionally adding it back to the asset pool, or pursuant to para 75(2)(o), or otherwise; each of those alternative approaches being a matter of discretion: (2015) FLC ¶93,660, 80,377. However, the Full Court also held that the exercise of the discretion required that account be taken of all relevant considerations, stating at [51] that:
. . . one of the most important of which was what the evidence revealed about expenditure from the account into which the funds were banked. That is because, amongst other things . . . “parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives” (C & C) [1998] FamCA 143) . . .
The Full Court held that if money was to be added back some years after it had been spent, account must be taken of what the evidence revealed about what had been spent on ordinary living expenses and of the parties’ financial position more broadly.
In Tuckson & Elsey [2017] FamCAFC 145 the Full Court considered an appeal in which the wife had unilaterally sold a property, applying the proceeds of sale in repayment of a loan to her father. The appellant wife contended error by the trial judge in adding back the net proceeds of sale to the asset pool. Upholding this ground of appeal, the Full Court identified error in the failure to consider how the proceeds had been spent or to determine whether such expenditure had been reasonable in the circumstances: [98], [110]. In that case, the wife had borrowed from her father for her living expenses.
Questions of notional add back thus present a range of considerations.
Existing property interests
As Stanford confirms, the Court must identify the legal and equitable interests of each party in the property said to comprise the asset pool. This is necessary because it is those interests which may be altered under sub-s 79(1). This first stage of analysis requires identification of the parties’ net asset position as at the date of trial: Hickey, supra, [39]. However, the depletion of assets between the date of separation and the date of trial may introduce a range of other considerations as to whether and how the net asset pool should be constructed.
When identifying the parties’ net assets, Hickey does not require that the Court should ascribe a percentage assessment to each of the parties’ respective financial contributions at the first stage of evaluation. To the contrary, Hickey requires that such percentage assessment be made at the second stage of analysis; that is, the point at which the Court should express its overall evaluation of all contributions (financial and non-financial) that fall within the ambit of paras 79(4)(a), (b) and (c).
The parties’ existing property interests were identified by reference to their agreed balance sheet which I have set out above.
By that document, the parties distinctly identified and acknowledged each of the assets for which the husband and wife respectively should be given credit as having made a financial contribution. In the circumstances of this case the Court can accept the parties’ agreed positions as to their contributions and their legal and equitable interests. In addition, the balance sheet identified an agreed position on asset and liability values, both as at the date of trial and at separation.
Mr Williams of counsel for the wife, submitted that the Court had a choice whether to adjust the parties’ property interests by reference to their net value as at the date of separation or the date of trial and contended for the former approach in this case.
Mr James of counsel submitted that it is invariably appropriate to determine the net asset pool as at the date of trial. I agree: Hickey, supra (2003) FLC ¶93-143, at [39]; Stanford, supra (2012) 247 CLR 108, [37].
The proper exercise of the wide discretion conferred by s 79 should not be confused with an exercise in accounting and, for that reason, it is unnecessary to examine or bring to account every asset and liability, provided that a reasoned approach is taken: Bevan & Bevan [2014] FamCAFC 19, [24] (Bryant CJ and Thackeray J, Finn J agreeing).
However, each of the parties contended that the asset pool might appropriately be determined by effecting a number of add backs. In those circumstances, it is necessary to some particular assets and to recognise features of the case which may explain why the parties adopt the competing positions which they do.
Disputed assets either party seeks to include in pool
In many cases, the parties’ asset pool indicated an agreed balance for particular items, both at the date of separation and at trial. Where those balances are of particular relevance they are addressed below.
It is necessary to make some findings as to certain items of property.
Property A property:a valuation of the property was prepared on the joint instructions of the parties’ lawyers. The valuers’ opinion was expressed on the basis of an inspection (that had been carried out less than two weeks before the trial began), together with a direct comparison of other properties. In the course of their written opinion the authors noted that the property had originally been constructed in the 1860’s and that although partially demolished, other renovation works had never been completed. Photographs included in the valuation confirmed the opinion that the property presented “as a shell in a sought-after location which appears to be suitable for renovation.”
Property B property:the facts relating to the purchase, use and sale of that property have been addressed. So too, the making of consent orders and the distribution of the net proceeds of sale was agreed.
Car parts: the husband has accumulated a volume of car parts that he stores upon the Property A property. The competing contentions ascribed a value of ~$nil to ~$40,000 to those parts.
As referred to above, the value of the car parts remained in dispute. The wife sought to ascribe a value of $40,000 to those car parts, submitting that the asset pool should be enlarged by a sum of $40,000 representing the value of car parts that remained at the Property A property. The husband submitted that the stated sum of $40,000 for those car parts should have been itemised and valued.
Valuation is a notoriously inexact science: Vale v Sutherland (2009) 237 CLR 638, [21]. Indeed the different purposes of the valuation may include the liquidation, compensation or revenue value of the asset. A liquidation value may often be appropriate in the context of s 79: cf Mallet v Mallet (84) 156 CLR 605, 617 (Gibbs CJ), 627 (Mason J), 637 (Wilson J), 642 (Deane J), 650 (Dawson J not deciding).
The husband pointed to the nature of the car parts and enquired as to what, if anything, they actually represented to the asset pool, submitting that they represented less than 0.1% of the total asset pool. The value of the car parts, if any, might be assessed by reference to the purpose for which they may be used. The parts represent a legacy of the husband’s hobby in relation to cars. It is common ground that the husband is now no longer capable of pursuing that hobby.
I find that the car parts have no particular or special value to him.
There had been adduced in evidence some receipts said to relate to the car parts. As concerned the receipts, they related to purchases in the period 1986 – 1993. There was no evidence upon which to correlate those receipts to any current value for the car parts.
There was no evidence as to the current value of those car parts. The husband submitted, and I accept, that if the wife sought to attribute a value of $40,000 to those car parts and thereby to enlarge the asset pool by that sum, then the Court was entitled to expect cogent evidence of that value: cfJLW (Vic) Pty Ltd v Tsiloglou (1994) 1 VR 237, 241-6 (Brooking J, Tadgell and Phillips JJ agreeing). Analysed as an issue that had been introduced by the wife, it fell to her to establish by evidence the value for which she contended: Bevan & Bevan [2014] FamCAFC 19, [80]. Here, there was no cogent evidence as to value.
I decline to attribute any value to those car parts.
A number of photographs were also adduced in evidence which demonstrated both the volume of car parts that have been stored in the property and that the presence of those car parts adds to the deleterious appearance and condition of the property itself.
Photographic evidence can be employed both as a visual reproduction and to understand other evidence. Particularly, they can be used, taken with other evidence, to assist the Court in acting upon the whole of the evidence. It is necessary for the Court to evaluate for itself the evidentiary significance of a photograph. They are unlikely to trump the direct observations of the witnesses themselves: Yarrabee Coal Company Pty Ltd v Lujans: [2009] Aust Torts Reports 82-024 at [20] – [29] per Beazley JA, at [178] – [181] per Giles JA (Allsop P agreeing).
In the present case, the photographs, both of the Property A property and the sundry car parts, together with the evidence of the husband and wife, enabled the Court to form an impression of three matters: first, the current condition of the house; secondly, the desirability of those car parts being removed from the property if there was to be any sale, and; thirdly, of the difficulties of the husband living in the Property A property in the longer term (below at [228]).
As concerns what orders should be made, I recognise that the presence of those car parts may have a deleterious effect upon any sale process in relation to the Property A property and whether the value of that property may be diminished by those car parts being left on the property during any inspection and sale of that asset (below at [292]).
Sundry bank, savings and superannuation accounts: the agreed asset pool indicates that the sums standing to the credit of the parties’ respective bank and superannuation accounts have been significantly depleted between the date of separation and trial.
It was submitted that the husband had expended such monies as were accessible by him in his ordinary and reasonable living expenses.
It was submitted that the wife’s use of funds was, by contrast, of a more extravagant nature. The wife conceded that she had taken holidays overseas (she explained those trips including that the husband had joined her on one of them). Her evidence, which I accept, was that she had no assistance in caring for the husband and that she needed some respite. It also appears that sums deducted from the (bank omitted) account were applied toward the purchase of a motor vehicle (her vehicle having been stolen). She gave evidence that the vehicle was used, in part, to assist the wife in taking the husband to his various medical and other appointments. Her accumulated (omitted) shares have been used to fund her legal expenses. I am not prepared to find that the wife’s use of such funds was other than upon ordinary or reasonable living expenses. The wife was not expected to live in a state of economic suspension between the date of separation and trial. I conclude that the amounts standing to the credit of these accounts ((bank omitted), (bank omitted) and (omitted) shares) as at the date of trial should be included in the asset pool.
Accordingly, I decline any add back approach on any of these sums.
Self-managed superannuation: as noted above, in 2001, the parties established the (omitted) Super Fund. It will be recalled that the husband ceased work by at least 2000 by reason of his illness. The Fund was set up upon the advice of the parties’ financial advisor, Mr S (who made an affidavit that was filed in the wife’s case). He was not cross-examined on, and I accept, his evidence.
Although it was contended for the husband that the initial sum settled upon that fund was $690,000 comprised of the aggregate of funds contributed by the husband from his existing superannuation fund with (omitted) and certain of the monies he had obtained by way of inheritance, Mr S’s affidavit deposed, that that $690,000 was comprised of:
(a)$312,000 from funds rolled over by the husband;
(b)$378,000 from investments held in the wife’s name.
As to s 75(2) needs, the husband underlined his inability to work by reason of his health difficulties. It was submitted that, because of the value of the Property A property, the husband could not qualify for Centrelink payments (in addition to his disability pension). He pointed to the wife’s conduct, he said, in depleting the assets of the self-managed superannuation fund. The husband also relied upon the wife’s continuing and, so it was said, ‘indefinite’, earning capacity. Further, the husband submitted that he would continue to require care and assistance, including the modification of his home and by way of help at home to assist him in his daily activities. While the submissions as to the need for care were supported by Dr P’s evidence, there was a paucity of evidence as to the cost of such care.
The matters identified above were advanced in support of the parties’ submissions that I should find, as they urged, that sub-s 75(2) factors were equal as between them with the result that there was no need for any further adjustment, either way, by dint of that provision. Mr Williams cautioned against a conclusion to the contrary.
As to future needs, Mr James squarely put the position that while the husband’s needs were more intensive in the short term, the wife’s life expectancy would be greater and that her earning capacity was coming to an end. He concluded that whatever the outcome of the case, both parties would have finances sufficient to support themselves. Mr James expressly declined to submit that any adjustment was warranted by reason of the competing factors in sub-s 75(2).
For completeness, I note that in response to a specific enquiry whether any earlier decisions had considered a property application as between parties, one of whom faced immediate and significant health issues, both counsel informed me that they had not located such an authority.
Discussion
The assets comprising the property that is the subject of this proceeding have been identified above. The legal and equitable ownership of those assets is agreed. I have considered the parties’ financial resources as at the date of hearing. The determination of those matters permits consideration of the precise relief claimed in these property settlement proceedings upon the evidence as presented.
I have considered whether it is just and equitable that an order should be made pursuant to sub-s 79(1) adjusting the parties’ property interests. As analysed above, I have concluded that it is just and equitable for an order to be made adjusting their property interests and have stated my reasons for so concluding.
I note that, as concerned financial contributions, the husband submitted he had made contributions of at least 75% of the net asset pool. The wife did not cavil with the husband’s financial contributions.
However, the principles stated in Hickey require the Court to identify and assess the parties’ contributions within the meaning of each of paras 79(4)(a), (b) and (c), and then to “determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property”: (2003) FLC ¶93-143, [39].
It follows that the percentage assessment that the Full Court’s approach requires is not of the distinct financial contributions alone, but of the entirety of the parties’ financial and non-financial contributions.
This is not to criticise the husband’s submission as to his financial contributions or the expression of those contributions as a percentage. It is to recognise that these stages of analysis should be kept distinct. A risk that is inherent in the approach of defining a parties’ financial contributions as a percentage is that it may obscure the substantial value of intangible non-financial contributions that may be appropriate to recognise under para 79(4)(c). Neither the lack of recognition, nor the fact that such contributions are insusceptible to a precise dollar calculation, renders them any less important: Trask & Westlake [2015] FamCAFC 160 at [14]-[15] (Thackray, Ryan and Murphy JJ); see also In the Marriage of Waters & Jurek (1995) FLC ¶92-635 at 82,379 (Fogarty J). Just as the husband’s substantial financial contributions must be given full weight, they must be evaluated in the totality of the parties’ contributions in their marriage.
It is then necessary to evaluate the parties’ contributions, financial and non-financial, within the meaning of paras 79(4)(a)-(c) and to express, as a percentage of the net value of the asset pool, the parties’ respective interests in that property based upon the totality of all contributions.
The wife accepted that the husband provided the greater financial contribution including by way of the inheritances that he received. Throughout the marriage, the total of those inheritances was $856,372. By contrast, the wife received inheritances, together with her compensation payment, which in aggregate amounted to $53,000.
However, both of the parties worked throughout the marriage. This case may be distinguished from cases such as Mallet. The seminal analysis in that appeal examined the justification for a presumption that equality of contribution should be the starting point in analysis of the property adjustment as between parties to a long marriage. The High Court’s consideration, and rejection, of that presumption arose in the distinct context of parties whose arrangement was that the wife should remain as homemaker and parent, thereby affording the husband the opportunity to contribute financially to their joint endeavour.
This case presents a quite different context. This was very much a contemporary relationship in which both parties worked throughout the relationship until the husband was forced to retire because of his illness. Indeed, after the husband ceased worked in 2000, the wife continued to work for at least fifteen years until separation in 2015, and still does so. This was the antithesis of a token contribution by either party. I consider that the wife has undertaken fully the role of homemaker and parent and has done so under onerous conditions. Both of the parties made financial and non-financial contributions.
The wife submitted that she had made the greater part of the non-financial contributions to the marriage, including from at least 2000 until 2015 when she was the primary care giver to the husband during the progression of his illness with (omitted) disease. In addition, the wife had been homemaker and parent to the children.
Mr Williams asked that I see the wife’s contribution in the context of a 35 year marriage and as one which involved increasingly greater care of the husband over more than 15 years of the progression of his illness until separation in 2015. To bring that submission to a sharper focus it was pointed up that the wife also had the care of adolescent children throughout the early part of that disease. The wife had to ‘go it alone’ for much of that period. There is force in those submissions.
The wife submitted (by way of concession in relation to an assessment of para 79(4)(a)-(c) factors), that it was appropriate for an allowance of 10% to be made in favour of the husband by reason of his greater financial contributions. The husband responded that a greater weighting than 10% should be given because of the value of the capital contributions he had made over the course of the marriage. It was submitted that due recognition should be given to those contributions, both as to the initial sum and of their value as at the date of trial. Accepting the force of that approach, it must be recognised that it is equally important to attribute due weight to the myriad other contributions made during the course of the parties’ relationship.
I do not accept the submission that a 10% adjustment in favour of the husband does not sufficiently reflect the differential in the parties’ relative contributions (financial and non-financial). I reject that submission because I consider that the husband’s capital contributions fall for evaluation in the context of a marriage of long duration, in circumstances where the wife worked throughout their marriage until separation and also undertook the role of homemaker and parent, including in the 15 year period from 2000 to 2015 (during which the husband’s health progressively deteriorated to a significant degree).
Concerning the contributions addressed by paras 79(4)(a), (b) and (c), I have concluded that a property adjustment of the net asset pool should be made as to 60% to the husband and 40% to the wife. In other circumstances, it may be appropriate to simply express the property adjustment in dollar terms: Sinclair, supra [2012] FamCA 388, [103]. I prefer to express the result here in percentage terms. The financial consequences of that conclusion are addressed below at [272].
Having expressed as a percentage my conclusion as to the parties’ contributions, I have considered separately the matters paras 79(4)(d)-(g) and the matters, so far as relevant, as prescribed by sub-s 75(2).
I agree in the parties’ submissions that the factors prescribed by paras 79(4)(d), (f) and (g), are irrelevant in this case.
As required by para 79(4)(e), I have considered, and agree in the parties submissions that the matters in sub-s 75(2), so far as relevant and which they identified, should be given a neutral weighting.
I have also considered (and concluded that) the matters referred to in paras 75(2)(c), (e), (h), (ha), (k), (l)-(na), (p) and (q) are not relevant.
I also accept in this context, Mr William’s submission for the wife that the concession by the husband as to the neutrality of the sub-s 75(2) factors is not unimportant in the evaluation of this issue. It is a not unimportant concession because it captures the question of the costs of the husband’s future care, a matter that was addressed by Dr P. Put another way, it was accepted that those costs fell to be evaluated as part of the parties’ future needs and so were accepted as being one of the integers in the evaluation of this issue – and one which the parties expressly agreed were properly seen as neutral in this case.
I therefore conclude that no further adjustment should be made by reason of the matters in paras 79(4)(d)-(g) or sub-s 75(2).
It follows that the conclusion expressed in percentage terms above should apply to a property adjustment of the net asset pool unless I conclude upon an overall review of the matter that some adjustment to the order is necessary to produce an adjustment of property interests that is just and equitable in all of the parties’ circumstances.
In giving effect to the determinations above, I have undertaken a review of the entirety of the facts and circumstances as presented in the evidence. I have done so for the purpose of reflecting, holistically, on what order is just and equitable in all of the parties’ circumstances.
As noted, I have concluded that a property adjustment of the net asset pool should be made as to 60% to the husband and 40% to the wife. Translating that conclusion to an adjustment of the net asset pool, I have found that the net value of that pool is $4,366,496. As a result, the wife is entitled to 40% of $4,366,496 being the sum of $1,746,598.
In making an overall assessment of the justice and equity of the order that might be made, I have also reflected upon the relative disparity between the share that the wife and husband respectively will receive. An adjustment of property interests in a net asset pool of $4,366,496 as to 60% to the husband and 40% to the wife results as follows:
Net asset pool
$4,366,496
Property adjustment to wife: 40%
$1,746,598
Property adjustment to husband: 60%
$2,619,898
Disparity resulting from proposed adjustment
$ 873,391
On the basis that an adjustment of property interests from the net asset pool will result in the husband receiving a sum of $873,391 more than that which would be allocated to the wife, I am fortified in the conclusion that it is just and equitable to make the orders proposed.
Framing of orders
It is necessary to address the orders as sought by the parties.
As noted above, s 80, which concerns general powers of the Court, confers a range of specific powers concerning the exercise of powers under Part VIII, including orders: (a) for the payment of a lump sum; (b) imposing terms and conditions, and; (c) as may be necessary to do justice between the parties: see para 80 (a), (i) and (k): cfKennon v Spry (2008) 238 CLR 366, [200] (Kiefel J).
Further, by s 81, the Court is obliged as far as is practicable, to make orders so as to achieve two objects: (1) to finally determine the financial relations of the parties; (2) to avoid further proceedings between them. The section does not in or of itself provide an independent source of power to make orders otherwise than in accordance with s 79: Hickey supra, (2003) FLC ¶93-143, [41]-[48]. The Full Court there considered the interaction of ss 79, 79A and 81 and underlined several important aspects of the powers conferred by Part VIII as follows: (a) sub-s 79(6) confers power to make an interim order respecting property settlement proceedings; (b) s 79A confers the limited jurisdiction to vary or set aside an order made under s 79; (c) a final order, once made under s 79, is treated (absent exceptional circumstances), as having exhausted the power to adjust property interests; (d) s 81 is to be understood as identifying practical means of achieving finality in property settlement proceedings.
In Hickey, the Full Court held that an order made under s 79 should be seen as an order that determines ‘once and for all’ the parties’ property settlement proceedings. It follows that once final orders are made under s 79, the power conferred by that section is ‘spent’.
I have examined the orders that were proposed by the parties. They provided for a series of payments in the discharge of specific liabilities. It appears to me to be preferable that, so far as may be practicable, there should be a single order for the payment of one sum and that any amounts for which the wife should be liable are first deducted from her entitlement in calculating the final amount which the husband should be ordered to pay. With those considerations in mind, I address the orders that were proposed and those that will be made.
The parties were agreed that, at least in the first instance, the husband should retain the Property A property and certain other assets. The agreed value of that asset is $3 million. It is unencumbered. As the authorities considered above recognise, the sale of the parties’ home is a not uncommon occurrence in this jurisdiction. Such a sale is not an inevitable consequence. While I do not need to be concerned in the process of execution, I have acceded to the parties’ submissions that, in the first instance, the husband should be permitted to retain the Property A property.
The order giving effect to that conclusion will be conditional upon the husband making payment to the wife of the settlement sum required by these reasons for judgment. The husband should be allowed a reasonable time to pay that sum. A reasonable time is ~90 days: [288].
It is necessary that deductions be made from the primary sum that I have determined the wife is entitled to by way of adjustment of the parties’ property interests. It is necessary to make those deductions so as to take account of particular matters as raised on the evidence.
First, by dent of the parties’ agreement to the distribution of the proceeds of sale of the Property B property and the Court’s interim order, the wife has already received $1,161,074 from that sale.
Secondly, the parties were agreed in final orders that the wife should retain certain property from the net asset pool, which assets were itemised separately in the draft orders provided at trial. There will be orders in those terms as sought. The agreed value of those items amount in aggregate to $44,470.
Thirdly, the wife must give an allowance in favour of the husband on account of the advertising expenses that he incurred in relation to the sale of the Property B property. On the husband’s case, the advertising cost that he paid was $5,814. The wife should bear 50% of that sum.
Fourthly, there is no deduction on account of the CGT liability in relation to the sale of the Property B property. There is no deduction on account of that liability because it was deducted in the process of determining the parties’ net asset pool. By that means their agreed joint liability for the capital gains tax has already been addressed.
In the result, I determine the application for relief as follows:
Net asset pool
$4,366,496
Property adjustment to wife: 40%
$1,746,598
Deduct interim distribution
$1,161,074
Subtotal
$ 585,534
Deduct assets to be retained by wife
$ 44,470
Deduct share of advertising expenses
$ 2,907
Payment due to wife
$ 538,157
The wife’s proposal recognised that ~90 days was a reasonable time to allow the husband to pay the amount as determined by these reasons for judgment. I accept that that is a reasonable time. By contrast, in cases where the paying party has ready access to liquid funds 30 days may be entirely appropriate: Sinclair, supra at [107], Cronin J.
The sum payable to the wife is payable by 4:00pm on 15 January 2018.
In default of the payment of the said sum of $538,157 the orders will then operate so as to provide for a sale of the Property A property. Once that default order becomes operative, the wife will become vested with a right (in lieu of payment of the stipulated sum), to share in the net proceeds of sale of that property. Upon that default order becoming operative, the husband and wife will become entitled to share in the asset pool in the fixed proportions above.
It was further submitted that an alternative approach to deal with the matter in default was to allow the wife interest upon the unpaid money judgment until payment. The wife’s submission, which was not opposed by the husband, opted for a sale in default rather than payment of interest. There will be orders in the terms proposed by the wife.
I agree in the wife’s submission that in default of payment the husband falls subject to an obligation (which might best be expressed as a negative stipulation), that he will not engage in any conduct, whether by act or omission, that would constitute a waste upon the Property A property, or otherwise have a deleterious effect on its value. To that end, there will be an order that requires the removal of the car parts from the property before the sale process (by which I mean and include the presentation of the property, both for inspection and sale).
There remain possibilities that one or either of the parties may not comply with their primary obligations under the orders. To that end supplementary orders will be made that provide for the consequences of non-compliance. I have included ancillary orders, including pursuant to s 106A, authorising the Registrar to do all things necessary to give effect to the substantive orders in the proceeding (as by the drawing up and execution of documents). I note that a caveat lodged on title to the Property B property was to be withdrawn to enable the completion of that sale. The orders for sale to be made now also adopt that regime.
Conclusion
The orders that are to be made in this proceeding in the exercise of the Court’s discretion under s 79 recognise the broad principle that orders made under s 79 should, so as far as is practicable, finally determine the parties’ financial relations. I am satisfied that those orders are just and equitable: JEL v DDF, supra, [152(i)].
I wish to acknowledge the particular assistance that was extended to the Court by counsel for each of the parties.
I certify that the preceding two hundred and ninety-five (295) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 10 October 2017
- AGLC
- Norris and Norris [2017] FCCA 2435
- Case
- [2017] FCCA 2435
- Decision Date
CaseChat Overview and Summary
The court was required to determine the specific orders for the division of Property A, including whether it would be retained by the husband with a payment to the wife, or sold on the open market. Key issues included the valuation and sale process of Property A, the removal of the wife's caveat, and the allocation of proceeds from any sale. The court also needed to address the retention of other assets and liabilities by each party, and to make provision for default in the performance of the orders.
The court ordered that the husband would retain Property A, subject to him paying the wife a sum of $538,157 by a specified date. This payment was conditional on the wife providing a withdrawal of her caveat. In the event of the husband's default in payment, Property A was to be sold on the open market, with detailed provisions for the sale process, including agent selection and price determination. The proceeds of sale were to be applied first to selling costs, with the balance divided 60 per cent to the husband and 40 per cent to the wife. The orders also stipulated the retention of various other assets and liabilities by each party, and severed any joint tenancies.
Orders
Orders of the court
1.
Subject to paragraph 2 below, the husband retain the property known and situate at Property A, being the land more particularly described in certificate of title, (omitted) (Property A property).
2.
Subject to paragraph 3 below, by 4:00pm on Monday, 15 January 2018, the husband pay to the wife the sum of $538,157.
3.
Contemporaneously with the payment to be made pursuant to paragraph 2 above, the wife provide to the husband a withdrawal of caveat (omitted) as recorded in the Register (Caveat) and indemnify the husband for the reasonable costs of such removal.
4.
In default of performance of the obligations pursuant to paragraph 3 above, the husband pay the said sum of $538,157 into Court and, upon such payment, pursuant to s 106A of the Family Law Act 1975:
(a) the Registrar is directed to draw up and execute a notice of withdrawal of the Caveat and to provide the same to the solicitors for the husband so as to give effect to the validity of that notice;
(b) the Court reserves the question of costs and expenses of and incidental to the preparation of the notice of withdrawal of the Caveat, its execution by the Registrar and lodgement.
5.
In default of the payment pursuant to paragraph 2 above:
(a) the Property A property be placed for sale on the open market (the sale) forthwith;
(b) by 4:00pm on Monday, 5 February 2018, the husband shall cause to be removed and disposed of all car parts and associated metal objects from the Property A property;
(c) liberty is reserved to the wife in respect of a failure or neglect to perform and observe the obligations in paragraph 5(b) above.
6.
For the purposes of the said sale of the Property A property:
(a) by 4:00pm on Monday, 29 January 2018, the husband shall select and nominate to the wife, three Real Estate Agents;
(b) by 4:00pm on Monday, 5 February 2018, the wife shall choose one of the three Real Estate Agents as nominated by the husband;
(c) in default of performance of the obligations in paragraphs 6(a) or (b) above, the Real Estate Agent to be appointed for the purposes of effecting the said sale shall be selected by the President of the Real Estate Institute of Victoria (or his/her nominee), the costs of which selection shall be a selling expense of the sale;
(d) within 7 days of the nomination of the Real Estate Agent, the parties shall agree the sale price and terms of the sale, and failing agreement, the sale price and terms of the sale shall be as set by the President of the Real Estate Institute of Victoria (or his/her nominee), the costs of which, including preparation of the contract and associated sale documents, shall be included as further selling expenses of the sale;
(e) the parties shall follow the reasonable recommendations of the nominated Real Estate Agent in relation to the presentation, sale and the marketing of the Property A property;
(f) the wife shall provide a withdrawal of the Caveat in exchange for her share in the proceeds of sale pursuant to paragraph 7 below.
7.
The proceeds of sale of the Property A property shall be applied as follows:
(a)to pay all costs, commissions and expenses of the sale;
(b) the balance to be divided, subject to paragraph 6(f) above, as to effect an overall division of the matrimonial property as to:
(i) 60 per centum to the husband, and;
(ii) 40 per centum to the wife.
8.
The wife shall retain:
(a) the interim property distribution received from the sale of the property situate at and known as Property B (Property B property) pursuant to the order of this Court made by consent on 5 October 2016;
(b) her (omitted) Motor Vehicle;
(c) her (omitted) Shares;
(d) any monies standing to the credit of her bank accounts;
(e) her personal effects;
(f) her superannuation.
9.
The husband shall retain:
(a) the interim property distribution received from the sale of the Property B property pursuant to the said consent order;
(b) any monies standing to the credit of his (bank omitted) account;
(c) any monies standing to the credit of the (omitted) Superannuation Fund;
(d) any monies standing to the credit of his bank accounts;
(e) the car parts and any funds received from their sale;
(f) the chattels in the Property A property;
(g) his person effects.
10.
Save for the purposes of enforcing any orders made above:
(a) each party is solely entitled, to the exclusion of the other, to all other property in the possession of such party as at the date of these orders;
(b) each party foregoes any claims they may have to any superannuation, insurance or employment benefits belonging to or earned by the other;
(c) all insurance policies remain the sole property of the named owner;
(d) the husband indemnify the wife against any liability arising from his ownership of the Property B property;
(e) the husband indemnify the wife in respect to any liabilities associated with the (omitted) Superannuation Fund;
(f) save for sub-paragraphs 10(d) and 10(e) above, each party is solely liable for and indemnifies the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders, and any other liability that is incurred in their name;
(g) any joint tenancy of the parties in any real or personal property is severed.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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