Oldfield and Oldfield and Ors

[2013] FCCA 213

FEDERAL CIRCUIT COURT OF AUSTRALIA

OLDFIELD & OLDFIELD & ORS [2013] FCCA 213

Catchwords:
FAMILY LAW – Property dispute – wife seeking sale of alleged matrimonial home – home in fact registered in names of husband’s parents – no legal basis initially asserted to give Court power to alter owners’ registered interest – whether respondent husband has interest in the property in any event – consideration of contribution and future needs issues.

Legislation:
Family Law Act 1975, ss.75(2), 79(2), 79(4)

Cases cited:
Baumgartner & Baumgartner (1987) 164 CLR 137
Burns & Burns (1984) Ch 317
Hibberson & George (1989) 12 Fam LR 725
Jones v Dunkel (1959) 101 CLR 298
G.E. Dal Pont and D.R.C Chalmers, fourth edition
Lawbook Company 2007
Ford and Lee, Principles of the Law of Trust
Miller & Sutherland (1990) 14 Fam LR 416
Napier & Public Trustee (WA) (1980) 32 ALR 153
Stanford & Stanford [2012] HCA 52

Applicant: MS D OLDFIELD

First Respondent: MR R OLDFIELD

Second Respondent: MR C OLDFIELD

Third Respondent: MRS H OLDFIELD

File Number: MLC 11609 of 2010

Judgment of: Judge Burchardt

Hearing dates: 1 November 2012, 15 February 2013 and
19 March 2013

Date of Last Submission: 19 March 2013

Delivered at: Melbourne

Delivered on: 16 May 2013

REPRESENTATION

Counsel for the Applicant: Mr Stavris

Solicitors for the Applicant: Mohan Yildiz & Associates

Counsel for the Respondents: Mr Cooper

Solicitors for the Respondents: Randles Cooper and Co Pty Ltd

IT IS NOTED that publication of this judgment under the pseudonym Oldfield & Oldfield & Ors is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT OF AUSTRALIA
AT MELBOURNE

MLC 11609 of 2010

MS D OLDFIELD

Applicant

And

MR R OLDFIELD

First Respondent

MR C OLDFIELD

Second Respondent

MRS H OLDFIELD

Third Respondent

REASONS FOR JUDGMENT

Introductory

1. This is now a property dispute as parenting issues between the parties were resolved by consent orders in May 2012.

2. Pursuant to those orders, the sole child of the applicant and first respondent (to whom it is convenient to refer as wife and husband, even though they are now divorced), namely [X] born [in] 2004, lives with the wife and spends time with the husband each alternate weekend and for one day in the off week, together with school holidays and the like.

3. The husband was required, pursuant to the May 2012 orders, to pay the wife $20,000 to be characterised as part-property settlement/spousal maintenance/relocation assistance.  The money was paid, albeit in part, late.

4. The case is characterised by a striking absence of objective, verifiable evidence in respect of a number of matters of very great significance.  The parties conducted their affairs throughout their marriage in a fashion which leaves but little in the way of effective record-keeping.  In part, this makes the Court’s function all but impossible. 

5. The wife seeks that the asserted former matrimonial home be sold and that she receive 80 per cent of the net proceeds.  The husband contends that the property belongs entirely to his parents and should not form part of the pool.

6. Given that the registered owners of the asserted former matrimonial home are, in fact, the husband’s parents (the second and third respondents), it is clear that the Court has no jurisdiction to alter their property interests unless the Court finds that the property is held in some way on trust for the wife.

7. While I have a measure of sympathy for the wife, for the reasons that follow, I do not think that the property can be properly found to be held on any sort of trust for her.  The wife has no legal interest in the former matrimonial home and, as the parties have expressly or implicitly contended, and subject to what follows each party will simply be left with those chattels or other possessions that they may have.

Some Agreed Facts

1. The husband was born [in] 1975 and is in receipt of a full-time carer’s pension. He continues to work, to an extent that is significantly in dispute, as a [omitted].

2. The wife was born [in] 1981 and works part-time in unskilled work for a [omitted].

3. The parties are both from the same town in Turkey and were married [in] 1998 in Turkey.  The wife came to Australia on a spouse visa.

4. Upon arrival in Australia, the husband and wife lived with his parents together with his brother, Mr S and his wife.  At or about the time of the marriage, the home at [T] was bought.  The husband asserts that a mortgage of $220,000 was taken out at the time and it is common cause that the property is registered in the sole names of the second and third respondents.

5. It seems to be common cause that a home previously owned by the second and third respondents at [S] was sold.  The net proceeds of the [S] property were approximately $60,000 so therefore the purchase price of the [T] property must have been $280,000.

6. There has been considerable argument as to the value of the property but I note that a sworn valuation for $630,000 has been obtained.  The property is the subject of a mortgage in excess of $460,000, a matter to which I shall return.

7. The [T] property, whilst being registered in the names of the second and third respondents, was the subject, as indicated, of a mortgage.  Documents produced under subpoena show that the mortgage was in fact applied for and taken out by the husband and his brother, Mr S, with their parents as guarantors.

8. The husband and wife went overseas to Turkey on two occasions during the course of the marriage.  The wife puts the expenditure on each occasion as $15,000 and the husband and his parents assert that it was $25,000.  On any view, the costs involved were significant.

9. On what turned out to be an extensive trip in 2003-4, the husband and wife underwent fertility treatment as a result of which their child, [X], was born. Everyone seems to agree that the sum spent on IVF treatment was $40,000.

Matters in Dispute

1. The wife has always asserted, and continues to assert, that the husband has been working full-time, notwithstanding that since about March/April 2012 he has been in receipt of a pension as a full-time carer.  The wife put the husband’s income as $3,500 per week.  He says he now works just a few shifts per week from which he earns no more than $140 per shift.

2. The wife asserts that she worked from time to time throughout the marriage and that she did all the housework for the extended family, at least until the brother, Mr S, moved out in 2006 (as to which see affidavit of second respondent filed 21 March 2011).

3. The wife has asserted that her earnings contributed to the payment of the mortgage and the family expenses generally and that her parents-in-law (the second and third respondents) spent their approximately $1,100 per fortnight pensions on themselves.  The husband and his parents both maintained that the parents paid the mortgage out of their pension.  The husband and his parents deny that the wife did all the housework.

4. The husband, together with other family members, bought a family property in Turkey in 2003.  Its value is impossible to ascertain as there has been no valuation of it.  The husband says his share is worth $10,000.

5. The wife has asserted that the husband bought the property for $30,000, but this seems to have been the total purchase price.

6. The wife’s assertion that she contributed money to the general family needs, so to speak, was contested by the husband and his parents who asserted that essentially she spent her money on herself, particularly on clothes.

Some Observations about the Credit of the Witnesses

1. The wife, who gave evidence through an interpreter, was in my view in the main a believable witness.  She answered questions in the main clearly and responsively.  She was somewhat hesitant when challenged as to her expenditure on herself, particularly on clothing, and that was one of the areas in which I found her unconvincing.  I should say, however, that the figures given for the trips to Turkey in 2003 and 2007, whilst given with sincerity must be accepted as no more than attempts at reconstruction.

2. The wife’s evidence about the amount allegedly paid to the brother,

   
   

   Mr S, was initially vague.  She said she did not know exact details.

3. The wife was, however, adamant under cross-examination that Mr S was paid $100,000.

4. The wife’s evidence about her journey to Turkey, upon separation, was another area in which in my view she was unconvincing.  She said she paid for the trip out of sale of jewellery and some money she had saved.  These answers struck me as being made up on the run.  In re-examination, the wife asserted that the husband’s income from working as a [omitted] was about $3,000 a week and she knew this because she used to count the money when he came home.  While I accept that the husband may have earned good money as a [omitted], I do not accept this aspect of her evidence.  It has all the appearance of reconstruction.

5. The husband was superficially a good witness.  He responded calmly and readily to the questions put of him.  Nonetheless, his evidence about the amount of work he was performing since he became a full-time carer was unconvincing.  Further, his initial assertion that the mortgage on the matrimonial home was taken out by his parents and guaranteed by him and his brother was clearly wrong.  It turned out to be the other way round.  Faced with this error, the husband readily conceded it.  The funding arrangements for the ownership of the only property the parties have is a matter I would expect him to get correct.

6. The husband was closely cross-examined about the e-tag expenditure of his brother, which has clearly gone up substantially in relatively recent times.  It was put to him that this increase reflected the fact that he (the husband) was now working under the [omitted] e-tag owned by his brother.  His answers were, in my opinion, unconvincing.

7. The second respondent was called.  Amongst other things he denied paying Mr S $100,000.  He said that the substantial increase in the mortgage from its original $220,000 to its now in excess of $460,000 arose out of assistance given to his sons to purchase and maintain their [omitted] business, overseas travel by the husband and wife, and IVF treatment. The second respondent’s evidence was generally given in an unremarkable way. It is sufficient to say that it was short on detail.

   
   

   Mr C Oldfield is in poor health and is elderly and it is not surprising, given his lack of English and lack of familiarity with our legal system, that his evidence was imprecise.

8. The third respondent gave brief evidence and it is fair to say that the remarks made about the husband’s lack of precision applied at least equally to her.

Findings about the Facts

1. It is clear that the parties conducted their affairs in a fashion that makes the distillation of facts now all but impossible.  Given that I generally believe the wife, I conclude that the parties conducted their financial affairs in an intermingled way when they all lived together.  It is not clear to me who paid the mortgage on the property.  I think that the amount borrowed would have severely taxed the second and third respondents if they were paying it alone out of their pension.  It is far more probable than otherwise that the husband and Mr S, who between them had a substantial income on any view, would have either paid the mortgage, as they were after all the ones who took it out, either assisting their parents or being assisted by them as the case may be.  It is clear that the bulk of family income was derived from the husband and Mr S until Mr S left.

2. Mr S was not called as a witness but the facts do not go far enough to justify a Jones v Dunkel (1959) 101 CLR 298 inference. No cross-examination of any of the respondents sufficient to meet that test took place.

3. Nonetheless, the wife says that Mr S was paid $100,000 when he left the home and I think that this is more probably the case than otherwise.  The husband roundly denied any knowledge of the $100,000 referred to in the bank records that had been exhibited and in the context of the circumstance where the family was obviously close, I find this denial unbelievable.  The wife says that Mr S was paid $100,000 and that the matter was discussed, so to speak, in family conclave and I accept that evidence.

4. I will never be able to say how much, if anything, the wife made by way of income nor how much of it she contributed to the general well-being of the family.  It is simply not possible to arrive at any positive conclusions on the evidence given.

5. As I find, the husband and wife went to Turkey in 2003 and 2007 and these visits were paid for by further draw downs from the mortgage on the property. The husband was not working during these excursions and income had to come from somewhere. Nothing in what the parties have told me suggests, contrary to their assertions, that they were in the habit of saving any substantial amount of money. Had this been the case then surely the mortgage would have decreased rather than increased.

6. The mortgage draw down account was clearly under the control of the husband and Mr S, as they were the younger, more dynamic members of the household.  They also were better integrated into the community, spoke English, and clearly conducted what might be described as the business affairs of the household.

7. I accept that the husband would have referred to the property, to the extent that he ever did, as “the family home” but whether this goes so far as to suggest that he expressly excluded any interest on the part of his parents (and prior to the payout, his brother, Mr S) I am unable to say.

8. In my view, it is more probable than otherwise that the husband is working more than he admits.  His brother’s e-tag pre-payments have jumped from figures roughly $1,600 per month to $2,240 per month in March 2012 and remain increased thereafter.  No explanation for this increase (see exhibit A7) has been proffered. 

Is it Appropriate for the Court to Make an Order Adjusting the Property Interest of the Parties?

1. As the High Court has made clear in the recent case of Stanford & Stanford [2012] HCA 52, the Court must first decide, pursuant to section 79(2) of the Family Law Act what the property of the parties is. It must then determine whether it is appropriate to make an order adjusting those property interests before proceeding pursuant to section 79(4) to determining how this should be done.

2. This is a case of the sort identified by the High Court in Stanford.  The relationship between the parties has clearly broken down and ordinarily it would clearly be appropriate to adjust their property interests.  This conclusion, however, requires significant qualification in the circumstances of this case.  The parties have no legal interest in the former matrimonial home at all.  It is registered solely in the names of the second and third respondents as joint tenants.

3. The question then is whether the parties have any equitable interest in the property.  Here matters are complicated by the fact that although the wife has sought the sale of the property and that 80 per cent of the resultant proceeds be given to her, at no stage during the running of the case did counsel advance any basis upon which it might be said that the Court had power, in fact, to alter the registered ownership of the property.  It was only when the Court brought the matter back for further submissions that it was submitted that the property is the subject of a resulting trust in favour of the husband and wife.

4. The brief written submissions made by the wife posited the proposition that the property was held on a resulting trust in favour of the wife.  It was submitted that the payment of $100,000 to the brother, Mr S, gave rise to a resulting trust in favour of the wife.  In oral submissions, it was put that the loan that had given rise to the purchase of the property was taken out by the husband and his brother and that the brother had been paid out.  It was submitted that the property was held on trust to defeat the wife’s claim and that the husband and his family had drawn down on the mortgage to defeat it.

5. The immediate, most obvious difficulties that face the wife’s submission is that, first, the proposition quoted in support of her position is more opaque than was suggested in this passage from the wife’s submission:

   “A resulting trust will be presumed where, on purchase, the legal title to real or personal property is vested in someone other than a person who is proved by parole or other evidence to have provided the purchase money.  This has been confirmed by Aicken J, with the concurrence of Stephen, Mason and Murphy JJ in Napier v Public Trustee (WA) (1980) ALR 153 at 158.”

6. Here, however, it is clear that so much of the purchase money as was provided for this property was provided by the registered owners – the second and third respondents. The remarks of Aickin J do not immediately fully support the submission made by the wife.

7. Furthermore, and on any view, the husband earned far more than the wife throughout the entirety of the marriage.  It is clear that in so far as the mortgage was paid at all, it was paid more (and by a wide margin) by the husband than the wife and further contributed to, as I find, by the second and third respondent and indeed, until such as time as he left the home, by Mr S.  In these circumstances the evidence does not, in my view, go nearly far enough to suggest that a resulting trust of the sort identified by the wife exists.  

8. Furthermore, even if one were to construe the events wholly favourably to the wife, it would not, as she submits, give rise to a resulting trust in her favour alone.  It would have to give rise to an equitable share to the husband. 

9. If I was to make any finding at all in the wife’s favour in this regard, the most one might say is that her and the husband’s contributions would give rise to a payment of some proportionality to the $100,000 paid to Mr S.

10. The next question is whether or not the matrimonial home should be held to be owned pursuant to a constructive trust in favour of either the husband and/or the wife. 

11. For these purposes, it may be assumed, notwithstanding that no party made any submissions in any detail about the matter, that a constructive trust may be said to arise in circumstances where, according to the principles of equity, a person on whom the Court imposes a constructive trust unconscionably denies another an equitable interest to which that other is entitled.

Was There a Constructive Trust?

1. Although the written submission filed on behalf of the wife mentions the words “constructive trust”, the submissions made by counsel for the wife were exclusively centred upon whether or not a resulting trust could be said to exist.  I have not accepted that submission.  The Court, however, has turned its mind to whether or not, in the circumstances, a constructive trust may have arisen. 

2. Having consulted Equity and Trusts in Australia, G.E. Dal Pont and D.R.C Chalmers, fourth edition, Lawbook Company 2007, and Ford and Lee, Principles of the Law of Trust, Lawbook Company, loose-leaf service, it is apparent that the precise boundaries of what might be thought to be constructive trust territory are little defined.  In Dal Pont, at page 981, the learned authors assert:

   “The constructive trust is a means adopted by courts of equity to make accountable persons in certain circumstances where to do so is consistent with equitable principle.”

3. In Ford and Lee, at paragraph 22.020, learned author writes:

   “A constructive trust is imposed by operation of law where, according to established equitable principle, it would be unconscientious for the holder of the title to property to deny the claimant a beneficial interest in that property, or for the defendant to deny that he is liable to account to the claimant as if he were an express trustee.”

1. The obvious possibility, in my opinion, that arises from this case here is that the parties might be thought to have conducted themselves in such a fashion as to give rise to what is sometimes described as a common intention constructive trust of the sort identified in Baumgartner & Baumgartner (1987) 164 CLR 137.

2. It is clear from the works to which I have referred that relevant considerations may include:

   a)a mutual arrangement between the parties under which the parties each spent monies for the purpose of their joint relationship with the object that some or all of those monies were to finance the purchase of the home (Hibberson & George (1989) 12 Fam LR 725 at 742-743);

   b)The pooling of labour on behalf of both parties (Miller & Sutherland (1990) 14 Fam LR 416 at 424); or

   c)contributions to family welfare by way of domestic assistance, such as homemaker and parent (Baumgartner at 155-157 per Gaudron J).

3. Nonetheless it is for the party asserting the common intention to prove it (Burns & Burns (1984) Ch 317).

4. Here, one of the difficulties that stand in wife’s way is that there is no evidence, in any direct fashion, of any common intention.  It is clear that the second and third respondents were registered as owners of the property.  Given that they provided all of the purchase price that was in fact advanced by anybody other than the mortgage funds, this would not seem prima facie in any way inequitable.

5. As I find, the family’s finances were co-mingled, but it is clear that it is impossible to say exactly who contributed how much towards these general expenses, including the payment of the mortgage.  All one can say is that the husband and his brother (while he was living there) clearly contributed more than anyone else.  It is also clear from the evidence that the husband’s parents left financial matters very much in his and his brother’s hands. 

6. In these circumstances, it seems to me that it is impossible to say that there was a common intention constructive trust in favour of the wife in relation to the [T] property.  Nor is it otherwise appropriate for the Court to construe a trust in her favour.  There is no evidence that she in any way altered her position to her detriment as a result of being told anything about any possible ownership on her part of the property.  To the extent that she contributed financially and in terms of housework, these were matters she would have attended to in any event.  The contributions were not of such moment as to come within the operation of the observations of Gaudron J in Baumgartner.

7. That is, however, not the end of the matter.  As part of the process identified by the High Court in Stanford, the Court has first to construe the legal and equitable property of the parties.  The question that arises is whether the husband had an interest in the property pursuant to a constructive trust. 

8. In my view, the Court should infer that the husband had an interest in the property.  The matters that give rise to this conclusion are:

   a)notwithstanding that the second and third respondents were registered as owners, the mortgage was taken out by the husband and his brother;

   b)the mortgage was serviced predominantly by the husband and his brother;

   c)following the departure of the brother the mortgage continued to be serviced predominantly by the husband;

   d)the brother was paid $100,000 when he left the family home.  Whether this was a notional purchase of his interests in the property or a reflection of his contributions at that time is not known, not least because the brother was not called to give evidence.  Nonetheless, it is clear that he had an interest in the property which was acknowledged by this payment.

9. In these circumstances, in my view, it would not be open to the second and third respondents to deny the husband any interest in the property.  It would clearly be grossly inequitable to do so. 

10. I infer that the parties bought the property as a common purpose, as evinced by the fact that the deposit was paid by the second and third respondents and the mortgage taken out by the husband and his brother.

11. The mortgage was taken out in the sum of $220,000, which was clearly the financial contribution predominantly of the husband and his brother.  The deposit was only $60,000.  The brother was repaid, in the end, $100,000.

12. There is no evidence as to the value of the property at the time the brother departed, nor is there any evidence as to what the amount of the mortgage then was.  In these imprecise circumstances, it is clear that the husband had an interest in the property, but it is no easy matter to quantify.  Doing the best I can, bearing in mind that equity favours equality, I find that each of the husband and his brother and their parents were owners in equity as to one-third of the property.  This appears to accord, at least roughly, with the figures of the initial contribution and the mortgage.  The property was worth $280,000 when bought and the brother was paid out $100,000.  The property would have accrued by a certain amount in the meantime and a one-third share appears to be approximately what the brother got.

13. Accordingly, in my view, the husband is entitled in equity pursuant to constructive trust to one-third of the value of the property.  Mr S has already been paid his one-third, so accordingly as I find the remaining equity is divisible equally between the husband and the second and third respondents. 

14. This brings us, therefore, to the conventional family law considerations. 

Should There be an Adjustment of the Parties’ Property Interests

1. It is clear, as the High Court indicated in Stanford, that this is a case where there ought be a adjustment of the parties’ property interest pursuant to section 79(2) for reasons already indicated.

The Pool

1. Relevantly, the pool consists of half of the net value of the matrimonial home.

2. It should be noted that I see no reason to adopt any figure other than the net value of the matrimonial home.  Substantial amounts of the monies drawn down on the matrimonial home reflected the parties’ holidays in Turkey, the IVF treatment, the payment to the husband’s brother, and other living expenses.

3. Although I note that the mortgage has not been the subject of periodic payments for some time, this is consistent with the husband’s assertion as to his earnings.  The amounts by which the mortgage has increased since amounts ceased to be paid into it in April 2011 appear to amount to only some approximately $20,000 of the total amount outstanding (see exhibit R4).  While it is tempting to view this as wastage, as the wife would undoubtedly assert it is, and while I accept that the husband has been earning more money than he has declared, I am not able to be sufficiently satisfied that this additional, relatively small, sum should be added back.

4. Likewise, whilst the husband has an interest in the family property in Turkey, there is no evidence as to its value and it would appear, in any event, to be an unrealisable asset because the property cannot be sold without the consent of its other owners.

5. I do not think that the $20,000 advanced to the wife should be added back because, as I find, this money was expended in the relocation that took place from Melbourne to Sydney.  Whilst it was characterised as a part-property settlement at the time, in my view, it is simply funds of no meaningful extant value to the wife.

6. Neither party has superannuation in any amount.

7. I note that the wife has asserted a debt to a friend.  That friend was not called to give evidence and nothing, so far as I can recall, was said about this alleged debt in the wife’s case.  I will therefore not include that as a liability either. 

Contributions

1. Each side contributed during the 10 or so years of their marriage in an unexceptionable way to the parties’ finances.  The wife undoubtedly worked for some period of time and her earnings were part of the common pool. She equally clearly performed household duties, although it is not possible to say whether or not she did anything more than her mother-in-law and the brother’s wife while she was living in the premises. The husband clearly contributed substantially more to the parties finances throughout the relationship. 

2. The wife has had the primary care-giving role in relation to the child of the relationship since his birth in 2004. 

3. In all the circumstances, it is appropriate to regard the contributions of the parties as equal.

Section 75(2) Factors

1. Here, it must be noted that the husband has something of a resource in the property in Turkey although it is not possible to allocate any figure to it.

2. Both parties are in generally unexceptionable health although the husband has some difficulties arising out of his excessive weight. The husband also has to undertake responsibilities as a carer for his own parents.

3. The wife has and will continue to have for years to come the primary responsibilities of looking after the child of the relationship.

4. In my view, in all the circumstances, there should be a 10 per cent adjustment in the wife’s favour.  The husband will continue to earn money, in addition to his pension, which he will not declare and although it is not possible to say how much that is likely to be, it is clear that his earning capacity will be substantially greater than that of the wife, in any event.

Just and Equitable

1. In the unfortunate circumstances of this case where the parties are arguing about small amounts of money, the above outcome (namely, a 60/40 division in the wife’s favour of the husband’s half share of the net equity of the home) is the best the Court can do to achieve an outcome that is just and equitable.  It should be noted that the wife’s claim for 80 per cent of the net proceeds of sale of the property has always been wildly overstated and, in my view, advanced on a basis that misconceives the law.  It is regrettable that the parties have spent so much money arguing about such a small pool.

2. I note that the [T] property is apparently in the process of being sold.  I will direct the parties to draw up orders to reflect these Reasons for Judgment.

I certify that the preceding eighty-three (83) paragraphs are a true copy of the reasons for judgment of Judge Burchardt.

Date:  16 May 2013